Sandshrew will be very useful at the 3rd gym. Definitely keep levelling it. Not many other options for ground-type until later in the game.

I could never find a use for Sandshrew or it's evolution for any stage in the game. It can learn TM Dig early on, but since you only get one TM Dig, it's better to put it on a good rock pokemon like Geodude or (my fav) Rhyhorn.

It has high attack and learns Slash pretty early, but it doesn't get a STAB bonus for all the normal-type moves it has (when your pokemon type matches your attack it gets 1.5x damage). Its main advantage is against electric types, but again ground/rock types will always be better and you can get Geodude early.

There's a daycare near cerulean city that will level your pokemon for you in case you're trying to fill the Pokedex, but you can also catch Sandslash much much later on.