Mer does have an onscreen keyboard. However, there are not many apps. Tear, claws, GPE suite, IM, and not much more. Also, it is buggy and very much in transition. Also, updates overwrite your previous settings, installed apps, etc. So don't get cozy with it yet.

My guess is that Mer 0.18 is when things will really start to get interesting. Maybe then it will be stable enough for the Mer team to start to think about a different update method and for developers to get more serious about porting apps.

But feel free to give it a whirl. If you have a memory card to spare, the installer worked quite well for me.