This is incredible, but a fact - the developers of Ruby on Rails and Merbdecided to combine the best that is in these projects. Yes, yes, Merb 2.0 = Rail 3.0.
What is the result?
Modularity. Rails will contain a separate rails-core package with the most basic, for those who want to select everything manually. For the lazy, everything will still be out-of-the-box Rails.
Agnostichnost. Now you can easily choose ORM (ActiveRecord, DataMapper or Sequel), tests (test / unit or RSpec), template language (Erb, HAML ...), JavaScript framework (jQuery fans are jubilant :)). Of course, it was possible to remake the Rails stack before, but now it is legal, without any hacks, and is taken into account in the architecture.
Speed. Optimization from Merb (for example, compiling routers) will be transferred to Ruby on Rails.
Public API. A public API will be announced, which they will try not to change. Plugines will break less often (unless of course you are using a public API).
Rack. Rails will be fully ported to Rack.
When?
Developers believe they can make a beta version of RailsConf 2009 (early May). The reality will probably be less optimistic, but the work has already begun.