As it stands now Elemental is nothing special when it comes to battles.  Really, I had more fun with battles in Age of Wonders or Master of Magic.  Age of Wonders had blood and great sounds/music, Master of Magic had speed and crisp graphics for it's time.  It just fit well, you know?  Anyway, as impressed as I am so far with Elemental's progress on its core system -- particularly the city building aspect -- I'm just disappointed by the battles.  It feels thrown-in and unfinished, and needs to be fixed badly.  Here are my main concerns;

1.  Sound - I have a serious problem with the sound...  When I attack something with a Broadsword I expect to hear a loud slash noise, not a dull thunk.  Bows have no sound when shot either, the voices SUCK, and some creatures seem to have voice sets that don't fit with their type of creature (this may have been fixed in an earlier patch I'm not sure).  Some of the sounds like lightning or fire effects are OK, and there is a good slash noise for axes and daggers.  But seriously, use some imagination, and get some REAL sounds.  Diablo 2 REALLY impressed me because of the solid graphics, but mostly the sound; especially weapons, which all had very good sounds.  I want to hear a loud wooden THUNK noise when a staff hits someone, but we don't have that here.  Just get a recorder and bang a thick wooden stick on a door or find some organic sounds rather than crappy programmed sounds, please.  We want to hear shields blocking blows with loud clangs, swords with great slashing noises, staves with nice loud thunks, and I WANT to hear a dozen archers all firing their bows at once.  Get a recorder, a dozen people with longbows and do it yourself, it's simple.  We want combat to be EXCITING!

2.  Graphics - While not a serious issue, and there are some things I do like, those are mostly restricted to spell effects.  I am referring to attacks here.  Because most people like to get done with a battle in a reasonable amount of time to get back to world conquering, but still enjoy a good scrap, it's important to make the battles you do fight exciting.  Example; Archers.  What the hell? Their animation is insanely long and boring if you have multiple archers.  All they do is draw their bows back (without even pulling an arrow from their nonexistent quiver) and fire a little white dot, which soars across the screen in a straight line.  The speed is solid, but aren't arrows supposed to arc slightly?  If you have a 3D setting, you should take advantage of that, and not be restricted to straight lines.  It was OK when Master of Magic and Diablo 2 were around, but even Age of Wonders had arcs.  It'd just be a nice touch.  And when an attack finally does hit its target, we are treated to... a white flash?  What I find highly amusing is that this game's ESRB reads; Blood, Fantasy violence.  And yet I see no blood.  And if you don't have blood in combat, where people are killing each other without mercy, then you shouldn't have blood anywhere.  In fact, I don't think blood even exists in this game.  I'm not sure if it just doesn't fit on your smooth graphics set or what, but it's something to think about.

3.  System - My main concerns in this area are with the outdated battle system.  You use a standard fare damage/armor and hit points system, which is fine, but the way its executed feels way too bare with no perks or differences.  For example a heavy axe deals damage the same way a sword does, but axes and hammers and such are normally supposed to get through armor a little better.  I know you have heavier weapons doing more damage, and treat that as armor piercing because it overwhelms higher defense ratings (where a lighter weapon like a dagger would be useless), but you should add a lot more meat to the system at large.  For example, you could have Defense rating simply be your ability to dodge, evade or whatnot, while Armor is only gained from physically wearing armor, or having an armor spell (like Iron Skin) cast on a unit.  Armor is actual damage reduction, which blocks a set amount of damage, and will always block that much.  Weapons each have their own 'armor penetration' ratings, which dictate how much of that armor rating they will ignore when dealing their damage.  For example, a Crossbow would have extreme armor piercing capability due to its high velocity and powerful bolt, same with an axe or heavy weapon.  Natural weapons like claws, or a golems fist, or dragon claw would probably have quite a high armor penetration rating.   Spells could also affect this rating -- for example;

Telekinetic Weapons - Wraps the weapons of a target unit in telekinetic energy, allowing them to hit with far more force.  Raises the Armor Penetration rating of a unit and all within it (if it was a group) by X points for every X points of Intelligence caster possesses.  Can only be used on units that can carry weapons.

Telekinetic Barrier - Creates a dampening field around a unit that nullifies X amount of Armor Penetration rating from an attackers weapons, increased for every X points of Intelligence caster possesses.

Note that Armor Penetration is not actual damage, it is just how much armor it ignores when calculating damage.

NOTE: The abovementioned Armor Penetration system is similar to Dragon Age: Origins own combat system, I'm not sure if this is subject to trademark/copyright or not.  I'm just making a suggestion to enhance the battle system, and this could work really well, giving a lot more meat to the system and create some more spells.