Is it just perception bias, or AC doesn't really matter much? AC 12 character get hit as much as AC 3 character, and spells like invisibility, leather skin etc doesn't seem to make any difference in monster's to hit chance. :(
I think (not certain) that AC in the Might and Magic games actually reduces damage when characters are hit, rather than making them harder to hit like it does in D&D. Have you noticed that your AC 12 character doesn't get hurt as much as your AC 3 character, even though they get hit with similar frequency?
This is probably also discussed in the manual.
EDIT: Never mind, just saw the other thread in which other, more informed players explained that it affects one's chance of getting hit, rather than reducing damage. I can say that when I played I felt that armor helped, but it was a while ago now so I don't remember clearly.