As long as upkeep costs are balanced things should work out.  Just another part of normal game balance.  Although in these types of games usually QUALITY wins out over quantity, if only because magic can give you immunities, etc.

 EDIT - In conclusion, balanced armies win wars! EG- if you have a bunch of awesome powerful water elementals that destroy most armies and they come accross some hero/unit that resists well their primary attack they're all dead. 

I think your both right. It'll be a complicated thing to balance in such a game due to the many factors. Base units, magical powers , magic resistance, different equipment and the composition of troops for tactical battles to name some factors.

Trippin you said "As long as upkeep costs are balanced things should work out." which brings me back to my original question(well statement anyway). I hope to see it viable to have large numbers overcome a few higher quality units to a certain extent however would that than undermine a large portion of the game such as resource management, production of items and unit customization?

Also it's mostly economic, if you have more wealth/magic resources, you can control more/better.  Economy is always key in a good strategic game.

Also i'm at work, work nights, heh.

Well in that situation yes, the lesser quality troops would win. The lesser would always win with a massive advantage in numbers. I left my post vague. I meant as a general rule with more equal numbers.1000 Knights verses 3000 peasants and I'd go with the Knights. 1000 knights verses 10,000 peasants and I'd go with the peasants.

Well, they should be adding an expert on game balance of some kind to the elemental team soon, I'd wager       so we can blame him if it isn't perfect.

Well, not to be picky (But im going to be because im bored at work) but I think 1,000 knights would probably utterly destroy the 10,000 peasents morale well before numbers began to tell at all...now 10,000 fanatical peasents..

I fail to see how the organization has to do with the reduction in #'s.  Neverthless I stand by my inital statement.  20 peasents would quickly realize they want to gtfo of there fighting two, platemailed/warhorses, multi-weapone'd knights.  Well, probably 14 of them...

Well, being normal peasents some would probably run as soon as one of them died, and i'm thinking they'd have no 'real' weapons but scythes/hoes, etc. Also I said "I fail to see how the organization has to do with the reduction in #'s," anyway I need to actually work a bit now. 

Same here. Both of these strategies should work in a balanced strategy game.

There's plenty of beta testing for balancing the effectiveness of units, spells, buildings, independents, heroes, etc., etc.,  .  Virtually any aspect of the game can have this topic. 

    Spells:  Quality vs Quantity

    Items:  Quality vs Quantity

etc., etc., 

Obviously part of beta testing is for game balance.

I see the quality vs quantity thing as being more a question of initial investment versus ongoing investment. So while training and equipping 100 knights would probably cost alot more that to equip 1000 peasants (they could probably just be levied from the population) the cost to keep an army of 1000 peasants in the field is significantly more than 100 knights. OTOH after the war the peasants go back to the fields and cost upkeep no more but the knights may need to be retained as professional warriors (depending on the society). So a peacetime army would likely consist of well trained and equipped professional soldiers. They would be more cost effective for their upkeep even though they have a larger investment. But during war time the professional soldiers would be supplemented by masses of cheap to train and equip recruits. Also a peasant army could be created QUICKLY while an army of knights would need ALOT of time to train. There will be alot of tradeoffs and I suspect any well-rounded player will use both types of troops according to the situation.

From what I have seen of such games, I think quality will win over quantity in the end. But the time and other resource investment required to create the infrastructure necessary for training the high quality units will be large, which will mean a gradual shift to high quality units as the time goes on. If nothing else, the maintenance costs will be in their favour.

But this game could be different. Not sure if that's a good idea or not. Personally, I am a big fan of high quality units, whether it be Civ4 (no choice), AoW:SM or even Age of Empires. Not always the best strategy in multiplayer, although it works fine against the AI.

we have no idea at this point.    can't even speculate until tactical combat is in, and even then who knows.