I don't think he's a great defender no. They defend well as a team, not necessarily their players. Mertesacker is a good defender, don't get me wrong, I just don't see him as a top 5 defender in the PL.
Who would you rate higher than him at CB? I'm only coming up with a few.
His positional awareness and aerial ability are excellent. Not great with the ball at his feet, but that's Koscielny's job.
Luiz
He's terrible. Awful positional sense and discipline Chelsea look far better when he's not involved.
Agger (whenever he's fit), Koscielny (prefer him), Terry, Luiz, Colo, Kompany. I do realize it's hard to really compare them like that since it's different kinds of defenders, but there's something with Mertesacker and the ball at his feet like you mentioned that kills me. So stiff in a way, I also like Kaboul and Vertonghen for those reasons as well.