Hey! Great let's play video!
Just a couple of things:
1) To upgrade an ability, you must do it in the status menu. To upgrade skill abilities (abilities that buff a particular skill), go to Menu-> Status -> Skill -> Select a skill to upgrade. To upgrade a hero ability, head to Menu -> Status -> Abilities.
2) The game use MP and Soul for skills (that's why at one point Francis couldn't use skills). MP is pretty traditional, but Souls (the green circles in the battle status window) are extremely volatile and replenish quickly by successfully executing the normal attack sequence. There is a maximum amount of 6 souls, and the action sequence recovers 3 souls.
Thanks for playing! I hope you liked it! If you have a chance to continue playing, I highly suggest you take a second look at the ability system! You can upgrade your skills and upgrade each hero!