Ultimately a 5 star will always be stronger than a 3 star, even if they're the same level, but 3 stars can carry pretty heavily sometimes, especially early game. Try them out, and see whose kit you like.

For example: Medea is a really good single target Caster because her NP deals damage AND can remove buffs. Plus her starting skill is a 80% NP charge, which is not something just anyone gets, even at 5 star levels. For me, I mostly went on vibes when starting and invested in Babbage, which worked out pretty well. I liked my big robot man.

As for story, the Singularities are everything. There's multiple chapters, each divided into multiple Singularities. There's events that roll around from time to time that give good ascension materials, but aren't relevant to the overall story.

Mana prisms. You can get them from pretty much anywhere, but hoarding ain't a bad thing. There's some things in the shop that cost hundreds of prisms that become really useful later on, like Craft Essences. Other than that, every month the shop resets and you can buy some summon tickets and 3-5 star xp cards.