I think my suggestion is pretty obvious from the title. However, I'd like to go into some detail on why this should matter in tactical combat.
Almost all great battles prior to the industrial revolution have been decided on who could outflank and/or protect flanks the best, as well as their field position. It's hard for me to see tactical combat being more than a glorified chess board if this kind of thing is never taken into account.
What I suggest is a damage modifier for units who are flanked, taking into account the direction they are facing. The units who are flanked should also receive a hit to being able to counter attack, or shouldn't be able to counter at all. I think units who are attacked from directly behind should receive an even more drastic effect on this, and they should also take a hit on morale.
In order for this to work you'll need to be able to choose the direction your units are facing.
I also believe field position should matter. Right now the computer just dumps your army in seemingly the worst possible formation imaginable. It would be nice if we had a way to edit formations somewhere, or at least be able to place pieces ourselves before combat starts. I know this is a little aside from field position, but if field position matters, then we need to be able to take advantage of it somehow. Total War does this nicely.
Another thing about field position is that certain tiles should have benefits/drawbacks. For example archers on a hill should do more damage and be able to shoot farther at units below them. Forrest tiles could give human/small units stealth, or perhaps a defense bonus against mounted units, or it could cost mounted units 2 moves to move on one forest tile. Narrow bridges could give a damage bonus to ranged units like archers, etc.
I know I'm probably not covering everything here, but I'd like to hear what you guys think too. I guess being fascinated by historical battles like the ones Alexander the Great was in, it just seems to me that field position, direction of units, and covering flanks were the prime factors into who won or lost. I think it'd be great if we could take advantage of such stuff in Elemental at some point, even if it won't make it by launch.
Heck if I can mod this in at some point I will, if it's possible.