Pick his equipment so that it improves his health and melee damage. This is the main reason to improve his melee damage and provide him with the best chain swords, axes and energy swords. Thaddeus and his men are equipped with jetpacks which allow them to get right in the middle of an enemy squad. Energy is needed to use his special abilities such as Infiltrate and High Powered Shot. Equip him with rifles and other ranged weapons and make sure he knows how to use them. I don't recommend taking Cyrus into the battle, but if you decide to use him, spend points both on ranged damage and energy. Pick the best machine guns for him (both bolt and energy guns) and try to get the best possible equipment to improve his abilities. Tarkus and his squad are focused on ranged combat and you should spend points to improve them further. Thaddeus will focus on melee, and later in game new kinds of weapons, such as force guns, rocket launchers and flamethrowers will become crucial - in my opinion, he should focus on ranged combat. You should focus on ranged damage from the very start. Spending points and picking the equipment is one of the most important aspects of the game.
Upgrading it further depends on the type of unit. You should spend one point on health of each of your units. Each time your troops gain a level you can distribute 2 (or 4 in case of the Drednaught) points among four categories:
