Rich: Military strength is a big factor in this game. Get a Fleet ranked 2nd or 3rd early.
Horatio: I decided to play two identical games (tiny map, 1 AI, "brilliant", saved at the first turn). "Game A", I researched & produced BattleHammers. "Game B", I researched and produced Frigates.
Initial impressions - BattleHammers are the better long-range investment. They live longer, level up better, and don't obsolete well into the mid-game (when Battleships/Dreadnaughts are available). Frigates are the better "blitzkrieg" ship. They have more MP's, and can get multiple attacks off. Against weaker opponents (Starfighters, Survey Ships, Corvettes) they can kill more during the initial invasion round. They also have further "reach" (range), meaning you can just physically get to more stuff on the first turn you declare war, and save 2-3 turns not waiting for a SB to get in place. Also, the planet producing the Constructor can, of course, be used for an extra Frigate or two instead.
In Civ3 terms, I look at BattleHammers as Swordsmen, and Frigates as Horsemen. The two units are roughly equivalent, imho.
~SDC~