I've overnighted in Merida, and will do so again when we visit the Yucatan and Starwood's haciendas this winter. My strongest memory of Merida is the evening dance performances. There are different types of dances performed in different squares almost every night of the week. It's not tourism driven; rather it is really part of the culture. The dancing was great, and it was fun to see all the local foods that were sold for the audience. If you buy the 2010 Frommers Cancun & the Yucatan, it has a list of which performance is each night. Overnights at the start and end of the trip are sufficient as long as you allow time to get to one of the dance performances. I've just looked at my guide, and the museums and sights seem on the small scale.

By the way, there is a Hyatt in Merida.