I decided to go with a more or less linear shooter, with the variation that rather than have direct control over a single unit, you have more strategic controls over a team of units. I still like my other idea better (the god game where you try and keep two warring nations from destroying each other), but I was having some major design difficulties with making that work. When you are doing well, the game basically consists of watching not much happen, and when you are doing poorly there really isn’t the feedback to know how to do better. Going to shelve that idea and maybe work on it later!
So, how to do formations? I have some pretty good ideas of how to give enough control to the player to really be in charge of the outcome of the game without it being challenging or turning into a click fest. I’ve started coding, but making the units actually work is going to be interesting. In addition I don’t think I really have much time to actually work on it 
I will consider it a success if I can get the 3 formations I have planned to even work properly, and at least have some opposition that makes the gameplay necessary. I have my doubts.
Here are the 3 formations:
Line – the standard formation. Think revolutionary war. Everyone lines up and fires at the enemy that appears in their sights. You can control the position and spread of the units. Best used in situations where the enemy is also in a line.
Circle – your units stand in a circle aiming in all directions. Most obvious use is when you are surrounded.
Concentrated – Sort of a diamond shape, with your units all aiming at the same spot. For when you really need to bring the firepower!
I’m sure I could keep going, but this is probably as far as I can get. I’ll probably have 2 types of enemies, a tough and a grunt, and they’ll basically come in waves and with very simple patterns. If that.