MIMF

I cut out my guitar bodies with a saber saw (incorrectly often called a jig saw) so have a jagged edge and not to the line left by the template. So my options are likely use a spindle sander and sand the body back to the template line or use a router, but that would need a 2" long straight router bit. What do you recommend and if you use a bit, what do you use?

Spindle and belt sanders for me.
With a 1/4" router, you can use a 1" bit with a bearing on the inside of the bit, following a template, and then flip the piece over and use a bit with a bearing on the tip of the bit to follow the first cut.
You may be able to find a longer bit if you have a 1/2" router.
After several blow-outs, I never use a router for the body outline.
If your material is soft, like Mahogany, it's not too much work using a block sander and some paper rolled around a tube.

I use both methods, depending on if I have a template for the body. If I have a router template, I use a band saw (or sabre/jig saw if that's what's available) to cut close to the line, then use 3/4" and 1 1/4" pattern router bits (bearing on the upper shaft) to take about 1/4" cuts (to avoid tear out) until I've reached its depth limit. Then remove the template and use the routed part of the body to go deeper. If more depth needed, flip it over and use a bottom bearing bit. I use a hand held router on top - never have got or made a table, though one would be nice.

If I don't have a template, I draw the body on the wood, cut close to the line, and use an oscillating spindle sander to smooth it to the line.

I do pretty much the same as Peter. As my guitars are all original shapes, I always have a template.
You can use any length bit you want, as long as it has a guide bearing. Take small bites and when the template gets in the way, remove it and use the side of the body that is already routed.

Last year I bought a new trim bit. It is made by Whiteside, and works like a dream. It has guide bearings on either end, either of which can be removed depending on what your requirement is.
I will say it is pricey, but worth it.
Todd Stock had a whole thread about it in the tools section.

I have a couple long, straight flute pattern bits, as well as one of the Whiteside compression bits Gordon mentions, but I've had some unfortunate blowouts on endgrain with both as Dan mentions. On my last two guitars I cut 1/16"-1/8" outside the line on the bandsaw, then sanded to the line with my oscillating spindle sander on the inside curves and 12" disc sander on the outside curves. I really like the Whiteside for template trimming the neck and headstock to shape, but left the "ears" transition area for the spindle sander. Endgrain is tough for router bits to handle, no matter the wood type, so I avoided the problem areas as much as possible. It was the first time that I didn't have any blowouts or burning anywhere.

Are you using a router with a 1/2" collet? When I upgraded to the bigger router I found that blowouts were no longer a problem even on maple end grain.

Yes, of course, and the Bosch 2.3hp unit. The maple end grain cuts well with the Whiteside bit, but softer woods like alder and some lower density areas of harder woods can collapse/compress even though the surface is cutting cleanly. You can see the same thing in earlywood grain areas of softwoods when crosscutting and the result is various sized and shaped pits. This can happen regardless of depth of cut or feed rate, climb cutting or not. I've even tried doing the trick with tape on the bearing or template and removing it for the last pass. If you're filling and painting your bodies, it's not an issue. But if you're doing natural finishes, those tearout areas can be very difficult to sand out and not change the outline of the instrument. Sanding to the line takes this risk out of the equation.