The slam is perhaps not as useful as the other two upgrades, but it does play a pretty important role as a movement tool - especially against the eyes and the last boss, moving up and down is crucial. Or when falling right into a trap with no way out, but not being above it yet.
It seems pretty common for such games to use Z and X, but you're right, there could have at least been more options.
The intention for the spikes was not really to be katanas. They are sort of "facing" you - when they were completely vertical it was a bit odd to me that you'd get damaged when running into them from the side. I believed their spiky nature is enough to imply danger.