Although my Spanish is very limited, I found the locals friendly and helpful. Very quickly waiters and shop owners recognized me and were extremely helpful.
There is a lot to do in the city and surrounding areas. Just walking around the centro area was interesting. For instance, I wandered into Miguel's which is the Mexican version of Michaels. Familiar with Michael's stores in the States, I was amazed by the size and sheer assault on the eyes of this store. The projects and items for sale were colorful, tacky and wonderful. The main mercado, a few blocks off the Parque Grande, is another great place in which to wander. The produce is pristine, there are sections selling everything from girls' shoes to taco presses, and the food stalls are excellent.
To get a good overview of the city, take the colorful Carnavalito bus. It's a quirky, gutted school bus with a guide who gives the tour in Spanish and English. Also a must is the Anthropology museum which houses treasures from the temples of places like Ek Balaam and Uxmal. We hired a guide for a nominal fee (US 8.00?) who was passionate about archaeology and really enhanced our visit. The free city tour that starts at the Municipal Palace is also a good introduction. If you like houses and wonder what's behind the facades in Centro, take the walking tour at the English library on Wed. mornings. I had 3 visitors during the month so I took it 3 times. I was never disappointed. Also visit the city museum (free) across from the mercado. Bonus, it's air conditioned. If you like folk art, be sure to visit the museum of popular arts housed in an old mansion. It's a nice small museum with an outstanding collection from around Mexico.
The free events provided by the city are definitely worth attending. Weekends are great for wandering because there is so much free entertainment. Even during the week there is dancing to live music at different parks. I also attended most of the Carnaval parades. My seats were on calle 60, about halfway down from the Paseo. This seemed to be a family area which I found perfect. Everyone had a good time and nothing got out of hand. I realize that other areas are different so if you want a controlled, good time, get seats in this area. Definitely some of the best people watching ever. The preschool parade was great. Little kids in elaborate costumes--some utterly lost and confused and others dancing and entertaining like adults.
I also took quite a few tours as they were all small, anywhere from 2 to 12 people, and reasonably priced. Consistently good were Adventures Mexico and Mayan Ecotours. I was lucky on the Celestun tour and went on a day that the guide estimated that there were 30,000 pink flamingos. From a distance, the entire horizon looked like it was on fire. The cenotes at Cuzama are a must too although I had to ask the driver not to whip the horse. If you like ruins but don't want to be hounded by crowds or vendors, I would recommend Ek Balaam, Uxmal, and Kabbah. A visit to the magical city of Izamal is compelling too.
My favorite restaurant was a two room, hole in the wall called El Congrejito on 57 (near 66?). It has a red awning and no written menu. They serve very fresh fish tacos, either 2 or 4. Because of my limited Spanish I would just ask for the quatro and get 4 amazing tacos, one of which was always shrimp. They are a lunch only place and do serve beer. The decor is funky and fun. Also good for fresh fish is Marlin Azul although it doesn't have any atmosphere. La Pigua is also good for seafood although I wasn't taken by the atmosphere.
Chaya Maya is consistenly good Yucatecan food as was my other favorite for local food, Flor de Santiago. El Trapiche has less expensive food in a lesser atmosphere. Los Alemendros also is decent for local food. On the more upscale side, I found Amaro and Los Pellegrinos to have lackluster food in a nice setting. Panchos, although definitely for the tourists, has a beautiful setting at night with decent food. Albertos had a truly beautiful night time setting and I would recommend the shrimp stuffed fish. Fridas is also pretty at night and their special stuffed poblano dish is excellent if you like sweet food. Rosas y Chocolate has a sophisticated menu with prices to match. For something different, I was surprised by Pan y Vino's homemade pastas. I almost didn't go there based on the reviews but I went back several times. Rescaldos had good Italian and Greek food in a pleasant outdoor setting.
I thoroughly enjoyed my stay in Merida and hope this is helpful to someone.