Always use a staff for any class you want to mdps on. Your matk will be much higher.
Run down of the Illusionist skills:
Deadly Icicle - useful for both pvp and pve. The cast time might be longer than fireball but the triple hit lets it do more damage than fireball ever could. If you can get your cast speed high enough, spamming Icicle = epic. Max it.
Hypnotic Eye - mostly used in pvp for sleeping opponents. Sleep is kind of the Illu's trademark pvp thing, since sleeping the enemy renders them helpless. You don't need to lvl it much tho since all you want is the sleep and don't really need to care about the damage debuff. Sleep has some uses in pve (mostly for crowd control).
Stimulation - Attack/cast speed aoe buff that is mainly used in pve for support, but nice to use at the start of pvp as well. Cast speed (and attack speed) = <3 Max it until you hit lvl 60.
Ancient Call - The illu pet summons that is mainly used in pve (tho after a point you won't see it used as much b/c of it's tendency to pull things it shouldnt or attack when it shouldnt). I wouldn't recommend using it in pvp if you plan on sleeping the enemy, b/c the Mecha pet will just wake them right back up again. Put leftover cp here if you want.
Emissary - Mecha's attack order. Mostly useless.
Mind Surge - mana regen buff that is required for pve. MAX THIS. You won't use it as much in pvp (except for tw/gvg and 10v10 which is all end-game stuff) unless the match happens to run long enough for you to run out of mana.
Psionic Focus - temporary invisibility + mcrit rate boost. This is a pvp skill only. It's nice b/c you can use illu skills while invisible, so you can enter a match by going invisible and then sleeping. I wouldn't lvl it too much until your illu is capped, b/c you have other skills that need the cp more.
Mind Control - pve skill only. Let's you temporarily make a mob your friend and fight for you (but the mob has to be the same lvl or lower than the skill). I almost never see this used. Even if my mind control was maxed, I wouldn't bother using it on mobs in dgns b/c it isn't needed (and it's annoying when all the mobs are killed and ppl have to wait for the befriended mob to become the enemy again so that they can kill it). So, don't bother lvling it.
Ineffective Magic - mostly a pvp skill, but you can use it in pve if you wanted. Reflects 20% of dmg bk to the attacker. It's nice as a pvp opener, but has a bit of a cool down so you won't really be using it more than once per match. It doesn't need to lvled b/c the reflect works just fine at any lvl.
Aerolite - good for both pvp and pve. Max this when you get to lvl 60. It's an aoe-knockdown skill (knockdown = enemies can't move/attack and take 1.5x dmg). If you sleep and then kd in pvp, the enemy will usually be dead in seconds (and unable to fight bk the whole while).
To recap: max deadly icicle, stimulation, and mind surge until lvl 60. At lvl 60 start maxing aerolite. If you have spare cp, you can lvl Ancient Call or Psionic Focus depending on your preference.