If you have Eirika, the answer is fairly straightforward: you should be running a blade team.
I'm assuming you already have a dancer, since Olivia is a free unit that circulates, I would consider the following team:
Eirika/Nino/Tharja/Dancer
This is a strictly offensive team, and would be used to buff Nino and Tharja and OHKO or ORKO the vast majority of heroes you deal with in Arena or otherwise.
Now granted, this leaves you vulnerable to reds, but reds aren't very common right now. You could swap out Tharja (the weaker of the two) with a Blarblade Ursula, and you would then have greens to deal with, which Eirika would be more than happy to do.
Otherwise, to answer your other questions, Sophia is probably the better choice of the two, as she has a fair amount of utility, whereas Raigh fails to stand out (just one man's opinion). Palla over Caeda any day of the week, as Caeda is practically incapable of killing anything. There are a bunch of recommendations out there that say you just shouldn't run red in Flier Emblem, so take that as you will.
Also, Eirika, although not particularly strong, has significantly more value on paper than Laslow, as does Xander. Eirika can apply buffs and is bulky, whereas Xander can tank and (with QR2) dish out loads of damage. Long term, Laslow has no hope of measuring up to their utility.
Hopefully this long wall of text has been useful!