A few points:
* Not as much documentation... sometimes it takes a while to find the Merb equivalent of some Railsism. The interfaces for Merb are very similar to Rails, though, so usually just trying the equivalent is enough. The differences I encountered were usually improvements over the Rails approach, IMHO.
* Smaller community. So, fewer plugins, fewer examples, fewer HOWTOs, etc. Hopefully this will change. But if you're uncomfortable developing something without a ton of resources to leverage...
* More flexible. I used Datamapper instead of ActiveRecord, and was very happy to have a choice. I was also very happy with Datamapper itself. I'm not sure Datamapper is mature enough, yet, for large scale projects, but the future is bright.
Overall, I think Merb benefits strongly from the "hindsight is 20/20" adage. It takes the best of Rails and rethinks its shortcomings. Where Rails was more revolutionarly, Merb is evolutionary. I think the improvements are worth the trouble of learning another web framework. I intend to use Merb for any new projects I start.
My demo app is http://ifrotz.org -- not that it's at all enlightening in a Merb vs Rails debate.