By the end of the game, the encounters are hard enough that it seems you have to have a fair amount of synergy in your party to get through the battles. I have never gotten away from needing the Priestess. What I have found that seems to work well is:

Sorceress - passive armor heal for 7 on everyone every round is very strong, and a decent blaster
Blademaster - Lifesteam keeps her health up enough, that she usually doesn't need any healing
Priestess - decent blaster, when not needed for healing or reviving one of the other two

What other parties have you seen work?

Sorceress, Inquisitor and Blood Mage.

But how do you GET the Blood Mage? I'm assuming you have to kill the Ice Queen (or whatever she's called) to free the Blood Mage, but I can't come close to killing her. In fact, I'm beginning to think the level is unwinnable. No matter how low your sin total all enemies are Level Five, and they mostly do 80 points of damage every time they hit, so it doesn't matter what combination of characters you play with.

I've been using the Priestess (44 armor, heals 35) almost exclusively to pass out 50, 75 and 100 point healing potions every turn, and she can't keep ahead of the damage being done, much less actually use her Holy Light to hurt people. I've been matching her up with the Sorceress, and her fire magic has been the only thing that's really useful.

I've been using the dark mage with them because he does guaranteed damage every turn and his dagger does double damage against the ice golems, but twice 20 still isn't very much against someone with nearly 400 combined armor and hit points. Still, his ability to drain rage from his opponents seems useful… but maybe I'm fooling myself because it's obviously not working.

I've tried the Blademaster in a trio with the Rogue and the defender(? the guy who carries a hammer and a book), but they are all melee damage characters and on the iceberg a lot of things seem resistant to melee. I guess I'll try Bhelogan's suggestion.

Oh, and I keep being pushed to sell my scores of pumpkins and hundreds of candy canes, but the goblin merchant won't take them.