I always use the rocket option.
In general during phase 2 I am usually to one side of the screen, and I try to always let that be the opposite side the cannon is facing. the only time I am at the bottom is if I am dodging the vulcan attack.
Phase 2 has 3 attacks (from the inside out), and generally how I deal with them:
1- The giant cannon in the middle, it will track you before it attacks.
If the cannon spins, faces you, and waits it is going to fire. I get to the opposite side of the screen (generally the bottom corners) as fast as possible. If you're quick enough the screen will cut off part of the attack off making it easier to dodge. It will turn to you again and you simply go to the opposite side again. Sometimes the attack won't be cut off and you'll have to dodge between the shots. When it uses this attack it will fire 3 times before switching to the next attack. Practice mode!!
2- The twin vulcan machine guns. These are actually
easier to dodge on 2-5, go figure.
These will start to spin and fire first, then track you. When they start to spin I position myself at the bottom middle of the screen and start firing. When it sweeps past I pick my window and dodge and then dodge again. You will have to do this about 3 times total before it gets bored and moves on to the next attack. This one is really just a matter of learning the spacing between the bullets. Again practice mode!
3- The starbursts on the outside, it will track you before it attacks.
This one is the biggest pain in the ass. As the cannon is turning to face you it will usually start firing before it stops. I wait till I am about to get hit and bomb. If there is one left move to the opposite side and dodge or bomb if you need to, but one of them isn't too bad.
My only plan with this phase is to destroy the left most starburst first in hopes that I can save a bomb should I need it on phase 3. When the timer hits 165 and it begins to face you I get on the left. As soon as it is a live target I fire the rocket at the left starburst and keep shooting the shit out of it. From this point it will pick its first attack and I refer you to numbers 1,2, or 3 up top.
The final stage is basically a big boss fest. Two tanks at the start, the plane, the train, and those three flying nightmares from hell (after much failure I own those bastards now!). It is the hardest stage (was for me anyway) and definitely took the longest for me to no miss.
Typically if I get to stage 5 with 1 ship in reserve I'm in good shape, and I can usually no miss to that point but not always. If I die more than once before the final stage its probably a lost cause
Remember - practice mode is your friend, and the one is UD is damn good.