I have some mixed feelings about the integration of Merb and Rails because Merb is a small "micro kernel" type framework that seems just about perfect for projects like light weight web services and web portals.
On the good side of this merger: if Rails becomes more modular and the resulting Rails 3.0 can also be tailored down to 'just what is needed', then this merge should end up being good for developers.
I have just signed a publishing contract for a new Ruby book that has one part on publishing information for consumption by both humans and software agents. After waiting a few months, I will grab early Rails 3.0 builds and write to Rails 3.0. A bit funny because before my holiday break I was deciding whether to use Merb or Rails for this book example.