What's an effective Small World strategy for new players?
One thing I'm discovering about Small World (especially in games with smaller number of players) is that it's not inherently balanced - your opponents can easily snap up amazing race/ability combos for cheap, leaving you with much less attractive options, just by random virtue of the seating order.

As such, you simply have to play a competitive game.  Don't just look at your race/ability combo in isolation: look at it also in terms of how much it can do to hamper the efforts of the player currently winning the game (or the player most likely to stop you from winning).

Barring special circumstances, you will generally have two races on the go at once: one Declined race in as defensible a position as possible, and one Active race doing things.  The Active race has a lot of work to do: it needs to take lots of territory (to get points here and now); take defensible territory (to keep getting points while in decline); and also, crucially, mess with the opponents: oust them from defensible areas and force them to go into Decline at points that are disadvantageous to them.

In short, I'd agree with everything the other answers have said about this being a game about adapting to circumstances - Small World is nothing if not a game of taking advantage of opportunities as they arise - but I'd add that it's not a game you can play without reference to how well the other players are doing.  If they have some good race/power combos going, then grab an aggressive race, get in there and do them over, as quickly as possible!  Defensive powers and play is all very well, but save it for when you're obviously in the lead...