This problem's going through my head for a while. Take Indonesia - everybody speaks fluently Indonesian there but Indonesian remains a second, "official language" for most people anyway. In Canada, there's a huge percentage of bilinguals - but even though French and English affect each other and create neologisms occasionally, they seem to remain two very distinct communication systems (I have no references for this).
Though, do languages merge together or tend to merge together when coexisting in an area for certain time?