Making dist.

Leave phoenix at L1 (until 8x when you have sp to spare and you can use the high damage low range skill), knockback only works in PvE, and only on melee mobs. (when will archer mobs get within 10m of you?)
Distance shrink rocks in PvP, and can be used for kiting mobs PvE at low levels. (Too high a level of shrink and you can outdistance the mobs)

Phoenix can be excellent in large-scale PvP if you have the balls to get close enough to a group of people to use it. It's fast and does great damage when leveled up. Also Wrathy is correct: Will of the Phoenix does work in PvP against venomancer pets. You can't really hope to outrun a veno's phoenix (they're fast as hell), so knocking it back is a nice option to have. :P

Distance Shrink at the higher levels can be used to speed up grinding (DSing between mobs instead of walking/flying), to get away from gankers when you have no dolls, to kite melees in PvP, speed up flying from location to location, keep people from targetting you, get through a mob you don't want to kill, and generally save your ****. Not to mention if you DS, the teleport (albeit not visibly) is instant. That means that you can't be damaged, aggro'd, stunned, etc if your ending point is not within range.

Conclusion for both PvP and PvE: Level 1 phoenix will do until you have the SP to spare (it's worth leveling later even for PvE due to damage and the knockback distance increasing), and level 1 DS will have you covered until 60+ when you should start raising it to help with grinding if nothing else if you've got the SP to spare.