1: It depends. If the archers are skilled enough, they will destroy your melee soldiers before they take five steps. However, if even one of your melee soldiers makes it, it's usually safe to say that the archers will be stains on the ground before long.
2: Blunt damage is caused by weapons like maces, mauls, and crossbows in melee. They have a high chance to break bones and bruise, even through armor. Bladed damage, caused by swords, has a high chance of lopping off limbs and cutting things up, but they often glance straight off armor. Piercing damage, caused by stabbing attacks and ranged ammunition, has a brilliant chance of penetrating armor and damaging internal organs, but the hit radius is very small. Unless your soldiers hit something vital, damage will be minimal.
3: What you choose is largely a matter of choice. A well equipped and trained crossbow squad is often better at melee than your average goblin hammerman, and a well trained melee soldier is basically a god.
The staple of most armies is crossbows, though. You usually don't need to worry about heavy armor since they won't be engaging the enemy directly, they're very cheap to maintain, and very few enemies have strong enough armor to resist a steel or even iron crossbow bolt. Your average goblin army can even be defeated by a steady hail of wooden bolts, too.
Pseudo edit: Ninja'd.