Stage 4 is, generally speaking, the hardest in the game. This is particularly true in loop 2 where the patterns all have revenge bullets, and there's minimal extra bombs to find, unlike Stage 5 which has like 5 bombs throughout the stage.
The alternate colors are just for looks in Donpachi; there are apparently no differences between P1 and P2. Note that this is
not true of the sequel, Dodonpachi, where there are some minor differences between P1 and P2 sides but that mostly apply to high level scoring play and if you're able to reach Hibachi.
Type C is the widest and generally considered the easiest for a 1 loop clear...? It's kinda weak in terms of frontal damage though, and the low speed is a liability in Donpachi due to the hitbox being slightly larger compared to later games. Its slow speed is particularly concerning if you loop the game and are aiming for a loop 2 clear.
Type A is the thinnest type and also moves the fastest. It's actually the easiest ship in the game to get a 2 loop clear with, but because of how the revenge bullets work in the loop. Once you memorize all the enemy appearances, having a thin shot type that can move quickly becomes advantageous for following a route.
Type B is my personal fave and the one I'm currently working on clearing with (have gotten to the
end of loop 2, stage 5 a few times now, getting there with enough resources to kill Taisabachi is the main problem now...). With the C button autofire enabled, Type B is actually the strongest in the game. It's got a decently wide main shot, the ability to sweep the screen similar to Type C, and has more speed. Its only real downside is it's not quite as fast as Type A (and its laser sfx sucks ;w;).
Type B can sweep its pods rapidly to the sides by holding down and tapping left or right, allowing it to quickly sweep waves of enemy popcorn ships. You can also tap and hold Shot rhythmically to recenter the gunpods as you're moving, so you effectively only fire straight forward. It's a very versatile and effective ship if you put a bit of effort into it, and I'd say it's arguably the best for a loop 1 clear when you invest a bit of time in learning to control it (because Type C is so slow in this one compared to later games like DDP). Its rapid shot damage beats out the rapid and laser damage of all shot types (except on bosses where laser gets a damage bonus, use the rapid shot when you need speed to dodge though) and the only thing stronger is laser aura damage. You can basically clear out entire stages of big enemies with the rapid shot alone, getting both focused straight damage and popcorn sweeping as needed.
Like later games in the series, the laser aura around your ship is very strong, dealing roughly double the normal laser damage, and there's some chances to use it well on many bosses except the fortress at the end of stage 5 (which will blast you immediately with a unique attack if you approach it). The aura includes touching enemies with the gunpods that are firing the laser.
All ships have identical bombs in terms of how they function. Laser bombs are ideal on bosses due to massive damage, but generally speaking spread bombs are better in stages because few enemies in the middle of stages have enough health to survive a spread bomb or merit the use of a laser bomb.