Thanks to the efforts of Pavel (github.com/pk), you can now use Merb with Carl & Yehuda's awesome new gem bundler (github.com/wycats/bundler). If you're working on a merb app, I would highly recommend trying this out and if it works ok, ditching the old thor tasks.
These steps are a work in progress so let us know how it works out for you. I'll try and get some pages up on the Merb wiki soon that has a better step by step tutorial.
First step, install bundler (latest 0.6.0)
gem install bundler
Install Merb 1.1 from Edge
git clone git://github.com/wycats/merb.git
gem install rspec extlib # required for merb's rake install
# generate new project using merb 1.1
merb-gen app bookstore
# create bundled app
# now you can run the bundled merb console
# you'll want to use bin/rake to use the app's rake tasks with the bundled gems
# you'll probably also want to install mongrel/thin to the bundle