Yes you should be defining methods inside your model.
Models are just classes and so you create methods just like any class.
To expand on your example of a 'variable' of two submitted via form:
class User < ActiveRecord::Model
This gives you method which will combine firstname and lastname (which
would be in the database) into a name
user = User.new(:firstname => 'John', :lastname => 'Doe')
user.name #=> "John Doe"
There is nothing wrong with defining these and calling them from a
controller, or view and not sure why that doesn't seem right to you?
You mention that the methods you have tried don't work for you, if
you're still battling, give us some code to look at.
"I have never let my schooling interfere with my education" - Mark Twain