I actually got my first Melanurus Friday, won in a raffle. He's still really small and will eventually be moved to a larger tank -- But for now he's in my Biocube and enjoy everything in my tank he can fit in his mouth. He will pick your tank CLEAN of **** near anything that isn't fish or corals. He's nipped at my delicious looking snails a few times but hasn't eaten them (yet), he likes to make sure the micro star arms that dangle out of rocks aren't tasty, and so far he gets along with the Firefish.
When he gets larger he will definitely need a longer tank.
I would say there are other fairy species that look quite nice, and [MENTION=3768]Confuse[/MENTION] is right about Flasher wrasse. This is the only wrasse currently in my tank, so i can't speak for wrasse compatibility -- But others have said they had great success.