I don't know about the moral. But each experience chevron up to a total of 9 (3 gold) gives you 1 extra point in attack and 1 in defence skill. So your slingers with a crappy 2 attack and armour piercing become juggernaughts of doom with 11 attack. Meanwhile most close combat troops become virtually invincible in a frontal assault with an extra 9 defense skill. This is useless against ranged attacks and attacks from the left and rear of the unit though.

Definately worthwhile training your best/most important units up and preserving them to get those valuable chevrons.

Although M2TW is different. The bonus is only one point every 3 levels to a total max of 3. Much less effective, but it does make things slightly more realistic, at least in regards to units with very low natural attack values like slingers and archers.