The woodcutter is one of the key foundations of the game. You will find this to be the most important building in your castle besides the keep in your early levels, and it will still play a key role in your later levels. Wood is always used in an upgrade, even if the building in question is 100% stone. No clue why, but it is. The importance of the woodcutter should not be disregarded. However, that being said, do not only upgrade the woodcutter, nor build a hundred of them. Following your quests is the best way to level up.
Note: The Woodcutter level 10 is only available to be upgraded when the Architect is camped outside your castle.