Presumably the reason you don't want the xmlns="" on the <price> element is that you want this element to be in the same namespace as its parent element (that is "http://schemas.fruugo.com/merchant-product") and not in the null namespace.
If you want the price element to be in this namespace, put it there, by creating it as <temp:price> rather than <price>; and the same of course for the children of <price>
Generally the principle is: think about what expanded name to give to your created elements (expanded name = uri + local name). If you put your elements in the right namespace, the namespace declarations will take care of themselves.
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Michael Kay
http://www.saxonica.com/
Author, XSLT 2.0 and XPath 2.0 Programmer\'s Reference
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