White paper: Deciding Between Merge and Peer-to-Peer Replication with SQL Server
Robert Davis (aka @SQLSoldier) provides clear guidance on the differences between Merge and Peer-to-Peer replication and how to decide which method is the right one to use for your particular scenario.
Merge replication has been part of SQL Server since version SQL Server 7.0, released in 1998. Peer-to-Peer replication (P2P) is a newer topology first available in SQL Server 2008. Peer-to-Peer was positioned as the preferred replacement for transactional replication with updatable subscribers which was deprecated in SQL Server 2008. Many people consider P2P to also be a replacement for merge replication, and in some cases they are right.
Merge and P2P replication can both be used to solve a lot of the same problems, but the implementations are vastly different. The real deciding factor between the two is often more about operational concerns than about the problems they are trying to solve. If the only concern was that you needed data to be updatable on multiple servers and kept in sync, either topology fits the bill.
The things you should weigh in your decision about which topology to use include performance, maintainability, and operational overhead. Cost may also be a determining factor in your decision.