Personally, I like merge commits. I often merge feature branches even if I could do a fast-forward, because the merge commit explicitly documents the set of patches that made up a feature. The question isn't really about merge vs. rebase; you should use both.

There's absolutely nothing wrong with a merge commit that says "merge feature-xyz into master"; you get a neat side path in the commit graph that contains the changes that made up xyz. Once you merge a branch however, you should delete it. Don't merge branches multiple times, and don't merge master into your feature branches.

You want to think of features as sets of individual logical changes, ie. patch series. I nearly always rewrite the commits in a branch before I merge it, to create a clean patch series. That usually means I also rebase the changes, but it's not always necessary.