One reason you might not be noticing the level, is that level has very little to do with damage output or protection in the player character. Most of your output comes from perks, which your NPCs don't have access to.
But that's not the main cause of the problem of unimproving followers.
Followers never get their skills or stats recomputed. If you find a follower at level 10, its stats are computed as that of a level 10. If you find a follower at level 20, its stats are computed as that of a level 20. But if you find a follower at level 10 and then you get up to level 20, your follower's stats are never recomputed - though your follower is technically labelled as a level-20 character, his/her stats are still exactly what they were at level 10.
PC users have long had a means of rectifying this. Thanks to CCNA above, though, for making me aware of a way to rectify this on PS3/Xbox360. Very useful. Maybe I will be able to get Lydia out of the kitchen again after all.