I'm totally new to Blender. Excuse me, if my problem is dumb.
I'm trying to model something rather simple from a mesh. A handle. When I try to merge vertices of those two highlighted faces, I'm getting pretty awful result with subsurf modifier. The same thing happens, when I snap one face to another and then remove doubles. I guess the root of the problem is something simple, but can't figure it out.
And the result: