I think people here are confusing the issue.
You can associate your mobile me email address with your itunes account so that email (e.g. store receipts) from iTunes go to your MM account. What you cannot do is merge the two IDs together - they are still different accounts.
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Example: My original iTunes account ID could have been
ROBS@MYISP.COM, and the email address associated with that would also have been
ROBS@MYISP.COM.
I then set up a MobileMe account. So lets say I am ****@ME.COM. I now have two AppleIDs, me.com, and the one ending @MYISP.COM.
I then want to change my iTunes account, perhaps because I no longer use MYISP.COM. I can login to iTunes, and change the email address to point to ****@ME.COM. However if I try to change the AppleID, it will throw up the duplication error, because it sees ****@ME.COM already being in use elsewhere.
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You used to be able to change that iTunes AppleID to anything else, though I believe now you have to use an email address. A few years back I changed it from being
ROBS@MYISP.COM to simply being the **** part of my MM account. As I didn't put the @me.com bit at the end, it was happy to accept this. As I say, I don't think you can do this now, and ultimately the only effect of this was to make things look cleaner, and stop my iTunes account being called something related to an email account I no longer had access to.
The issue is caused by Apple automatically making all MM accounts Apple IDs, as opposed to when you sign up to MM asking you if you had an existing AppleID and "upgrading" that (if they did do this I certainly never remember seeing it!).
For those who are confused, the issue now is that at the service level, iTunes and MM are being effectively merged (from the information Apple have given so far). So if I set up my iCloud using my ****@ME.COM then it will work with all my emails, contacts etc. But it won't see my iTunes purchase history as that is stored in a different account, so the iTunes in the cloud won't work. Similarly if I set things up using my iTunes account, then it won't see any of my emails, contacts etc.
In an ideal world Apple will now allow us to merge the two. I worry however that they may not see this as a problem, and tell us to simply stop using the old iTunes account as the iTunes purchasing account, and sync by cable all the purchased content across. Thoguh I'm not sure if iOS lets you have content from more than one AppleID on the same device at once, so that could also get messy.
Either way, it's already an issue that has irked users for quite a few years (just google it and you find threads going back years!), and its something that Apple Support have previously agreed is an issue but have offered no solution to.
The only thing we can really do is wait, though in the meantime it wouldn't hurt to submit feedback to Apple via
http://www.apple.com/feedback/mobileme.html and
http://www.apple.com/feedback/itunesapp.html.