I was always more of a Pippin fan, but recently I've liked Merry just as much. If you are going to talk character development wise, you would have to say Pippin is the greater. He is transformed from a know-little Hobbit to a soldier of Gondor, coming back to the Shire no longer the youth he was. He went into the journey a "boy" if you would, making many mistakes and follies along the way, but returned as a "man".
Merry was thoughtful and clever all along. He usually knew what to do, and what he wanted to do. He rarely (if ever) made a mistake. So if you're talking solid character wise and overall contributor to the Quest, then perhaps you'd say Merry. There's plenty Merry did, but Pippin also helped the Quest greatly even though he was the one who didn't mean to. In looking through the Palantir, Pippin gave the Company the desperate answers they needed. Not to mention he saved Faramir. Can you compare that to aiding in slaying the Witch-King? I don't know, in the overall mission of the Quest, probably not.
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"Loud and clear it sounds in the valleys of the hills...and then let all the foes of Gondor flee!" -Boromir, The Fellowship of the Ring
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