I just reached Freedom Islands, but cleared pretty much the whole first part of the game with:
Bears
Dwarven Alchemists
Beholders
Royal Snakes
Griffons
Wolf howls cannot hurt me
The Griffons are handy if I have to deal with ranged units quickly
The bears and snakes both have a fair bit of "soak" ability
The Alchemists have some great ranged attacks
And, since I'm playing a mage, my fireballs usually support them quite well
I've had this army since the early game and am now about 1/3rd through the islands and doing well
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