Everybody says flat is fast.
Does heeling the boat slightly to leeward going upwind help you to climb due to the hull shape or just cost you more in boat speed than you would gain due to the increased wet surface area? 
Would this change by hull design?

Don't think about the hull - think first about the foils. First think about sailing without a rudder. You will know that leeward heel points you up - thus if you put the rudder on it means you have to pull the rudder => you are 'applying a break'. Secondly the c/board will be at an angle, try and work out the hydro dynamic disturbance = the c/board does create hydro dynamic lift which is quite substantial heeled will distrupt the flow. 
Then think about the sails, upright the forces are side ways and forwards parrallel with the wind flow, near enough horizontal. Heel and now you convert some of the force downwards i.e. wasting energy in either making the boat heavier or forcing it to tip more.
Finally, think about the hull, instead of the water flowing along those lovelly planks it now travels over bumps.

In summary, except in specialist conditions, i.e. no wind so the heel holds the sails in shape waiting for zephers, or river sailing when the wind direction can be quite vertical, flat is fast.

For an aerodynamics point of view, actually windward heel is faster as you use the side force from the sails to provide vertical lift. However, I think that on a Merlin, the resistance of the hull when not level eliminates any advantage. Moths, windsurfers, and skiffs, all try and go to windward heeling to windward (a very weird sensation!). Of course you could try and cant the rig to windward and have the hull level - Mr Neal's Merlin tried this, I presume it did not work as we are all still sailing with sideways fixed masts.

It's all about VMG isn't it. Slow and high or fast and low you need to be able to do both, that's why lots of classes including Merlin Rockets have multi adjustable rigs.

Like most things, it has been tried before.  According to the Merlin Book (available periodically on *bay for unbelieveable sums) Stiletto was designed by Guy Winder to be sailed heeled slightly upwind with a gybing centreboard.  It didn't work and the boat was modified to go flat and straight instead and was still sailing in this mode 3 or 4 years ago with reasonable success.  So a hull designed to heel slightly is not feasible without compromising something else.

The best answer to how to sail the boats we have is to look at what the front of the fleet do as that will tell you how to get the boat round the course quickest.  You will find that not only is flat fast but flattest is fastest.

RE: >> flat fast but flattest is fastest.
Earlier posts on this forum have also suggested that the top boat at the Nationals was not any flatter than any of the other top boats, but that his sailing was SO much smoother. No sudden rocks, rolls, luffs, bear aways, ooching or anything else that might knock the wind out of the sails or disturb the laminar flow of the wind over the rig.

This depends on whether you are looking at what no. 1 does better than no 10 or what no's 1-30 do better than no 60.  I refer you to Eric Twiname's classic and still very useful work "Start to Win" where he points out that a) in a reasonable breeze the front of the fleet sail the boat flat and the back do not, and b) the reason for this is that they have a different set of priorities and keeping the boat flat is not at the top of the list.