When looking at equipment, you will see that they have a modifier, ranging from S being best, A being second, down to E being worst scaling, next to none. This scaling converts a percentage of that specific stat when you use that weapon or armor.
To see how much this bonus is actually affecting you, equip the item, then in the equipment screen, simply hover over it and look at the stats to the right. Say a weapon had 100 physical damage, with an A Strength rating and B Dexterity rating, with you having 40 of each. The weapon's damage will still be 100 physical damage, but beside that number will be a blue +x, the x being the bonus granted by the scaling.
While leveling your stats might appear miniscule when you look only at the stats card, you will notice a vast improvement if you were to wield a weapon with B scaling over a weapon with E scaling. Even if the weapon with E scaling appeared more powerful, in the end, the B scale would have the greatest potential.
In this regard, leveling Strength and Dexterity will provide the character with increased damage, but less versatility. It is not unheard of for a character to focus on multiple skills, such as being competent with melee and magic, or a magic user that has strong defensive capabilities.
A character who has split talents will not be as proficient in all of them, but will be better suited to take on many situations. As an example, the boss
Ichorous Earth, of Iron Keep, just before the Primal Bonfire, is a large boss that is present only in lava.
A melee character can, feasibly, combat this boss, but a magic or ranged user will have an easier time with it. A character that is proficient in many roles may have an even stronger upperhand. In truth, it is all a matter of preference and playstyle.
Best Answer
Yes, upgrading your charm affects the potency of miracles. This means that the damage of miracles such as Lightning Spear increase and the healing of miracles such as Heal also increases.
It's more effective to upgrade your charm than it is to add 1 point into Faith. Upgrading your charm once will add 20-40 damage to your Lightning Spear which is significantly more than adding 1 point into Faith.
In short; upgrade your charm to increase miracle potency
(Upgrading your charm also increases the melee attack if you are so inclined to bonk someone over the head with it)
To reflect the queries in the comments, I have tested the healing and it does increase the amount healed.