I think both sides should be able to place their units before combat starts, or at least the side that initiates the combat. I would like to be able to place ranged units in the back and spread units out so that they don't all get blasted by AOE spells.
Sometimes my ranged units start in the front row and if I lose initiative and the enemy unit is within range on the first turn I lose my ranged units. This is just not logical. Also, whenever I get my first turn fireball off and the enemy units are all nice and bunched up I can usually destroy most if not the entire army with one spell. They should also be able to spread their units out before combat.
Perhaps only one side should get this ability, the side that either attacks first or the side that wins an initiative "roll" with the attacker getting a bonus. Could also add some sort of ability to hero units that allows "surprise attacks" or adds to an armies ability to set up their units pre-combat.