Go for the skills, the equipment will come along the way
I always do my tavern quests first and distribute the points before starting my arena fights, that way you enter the battles with (possibly) some skills on a higher level and he/she should perform better

I don't believe a lvl cap is really needed for skill levels since you will be a fairly moderate level by the time you get your skills to 10 anyway and the trophy function (pay for all of the gladiators skills right away so that theyre maxed at a low level) will catch up with them fast as your gladiator will win alot of his fights and come across gladiators of 10-15 levels higher than him very soon which is where the difference in equipment kicks in