We use First-class w/tracking for any domestic shipment under 13 oz, and Priority w/tracking for domestic anything else. We have noticed an overall lag in FC shipments, compared to Priority. It started January 22nd.
It used to be that FC and Priority traveled on the same plane, landed at the same airport, and were delivered at the same time. FC was simply "Priority-light", with the same level of service, and a much-cheaper price.
Lately (since 1/22/12), we've seen Priority move ahead in the delivery queue, after landing at the airport. We've had FC packages sit for 3 days, literally 20 miles from their destination, while Priority packages arrive as promised.
Regarding your 2nd question, we used to offer Priority-only shipping for everything, before "discovering" first-class w/tracking. Once we began offering FC, our sales of smaller items (under 13 oz) increased dramatically. It's the opposite scenario from what you asked, but you can probably draw conclusions from it.
Finally, regarding Tracking, we use Tracking on every package (it's now free for everything except Parcel Post), except for First-Class International. FCI is tracked to the border, and that's it; scans stop. Funny thing... 95% of our non-receipt claims are with FCI. Why do you suppose that is? <sarcasm>