[Gil Galad]

Interesting point, while the Valar commanded the istari not to challange Sauron directly, it doesn't mean that they were any less powerful in any form. I think Sauron was less powerful in spirit form, because he mingled his blood with the ring, so to speak. He could only regain full strength if he got the ring back. I think the Istari are the same height in power in any form, the Valar only told them not to challange Sauron directly, but let the people of middle earth defeat him themselves. I also think they chose old men, is because the elders symbolize wiseness.

hope this helps!