Does illusion spells work on higher level enemies? Example:Im level81, since the games levels up with you will my spell that says only works on level35 enemies work on level81 enemies? or does the skills become useless after a certain level?

Enemies as well as NPCs have a set level cap. This can be 30 or 50. Very few will level past 50.

Here is a great set of info on Illusion...http://www.uesp.net/wiki/Skyrim_talk:Illusion/Archive_1#.22Higher_Level_Opponents.22