Don't battle with it, unless it's nowhere near level 26. Although, when you're battling with it, make sure it's in the low 20's or something; just in case when you level it up it's not happy enough. Try and make it happy. There's a thread somewhere about how to make your Pokémon happier. Then, take a walk with your Pichu and make it happy. When you do it long enough, level him/her up to let it evolve into Pikachu!
As to when you should evolve your Pikachu into Raichu is all your opinion. I like using stones to evolve my Pokémon after he/she learns its last attack. Pikachu's is Thunder, but there is also a TM for it, so you have the option to level it up until the level it learns Thunder or just use the TM. Don't forget that Pikachu needs a Thunderstone to evolve! =D
♥ I hope that helps!