do you use the different party formations to protect weaker members (spellcasters,bards), or the guard/protect button? I'm asking because I think this can sometimes make a difference in an upcoming fight, as to who the enemy attacks, strategic positions etc. also, do you take into consideration which character to put in the first slot, charismatic characters who tend to be weaker and liable for attack(if you don't have a paladin), or more "tankish" characters who won't do much good dialogue-wise?

I currently have a Half-Orc Fighter[4]/Barbarian[x] as my team leader and have faced no problems.
Most dialogues are triggered when a charecter crosses a certain line. If you think that having some char other than your leader talk is beneficial then just send that char forward while keeping the rest of the party nearby.

As far as fights go you get the best options with such a setup. Most enemies will go for your frontline ,so ugly tanks as 1 & 2 will make your life easier. If you intend to use area effects then a warrior with his high saves should get out with little damage(there are more than a few places where all talk ends in war so why waste your charms?)

In the standard 2x3 formation your arrangement should be:
Line 1: 2 Tanks
Line 2: 2 Spellcasters
Line 3: 2 Archers
This will protect your 2 weaklings from being directly attacked in most cases.

Yes, I will tend to use the formation that best enables my strategy, but since I never use the AI while playing, using the formation only saves me some steps of moving members around, rather than being truly useful.

When I think I'm going to have a conversation, I either drag the "talker's" portrait to the front and send the whole party forward, or select the "talker" and send her forward alone, depending on whether it's in town or in a dungeon (and how I feel at the particular moment ;) ).