I am thinking about the question of whether keywords in the domain matter. Many people have posted that they see such domains atop the serps and then concluded, based on this, that it must matter. But in reality, its probably simply because the most established sites are those that first grabbed up those names since those are the names you would naturally want first. So of course you see those at the top. It follows that you won't see hyphenated names too high until they've had a chance to naturally rise. I find it hard to believe that the engines would actually take domain name into account, given the other information a web page provides.
There is so many factors to rate a page as per google that I beleiev keywords in domains are just one the factor.
YES keywords in domain name is an effective way to start optimising your site. but unique content also matters a lot. if your sitename includes top keywords but doesnot have any relevant content, it's of no use. using keywords in domain name is just a part of SEO techniques, not the complete solution. there are a lot of other factors that effect your site ranking.
I believe keywords in domain names matter but not the extension. Hyphens help to act as the word separator.