The levels in storyline battles are more or less set and won't increase. However, the enemies in random battles (and in the side quests and deep dungeon, I believe) will keep pace with the levels of your highest characters. If your characters ever get to be too high in level for their own good, remember to use the Degenerator traps (or the Mindflare's hidden ability, 'Level Blast') to level down. Good luck with your new party.