I'm able to create coupons in the backend however in the checkout process, the option to enter a coupon is not there. The only other information I can find on this is how to disable coupons by commenting out the line
block type="checkout/cart_coupon" name="checkout.cart.coupon" as="coupon" template="checkout/cart/coupon.phtml"/
in the file,
/app/design/frontend/base/default/layout/checkout.xml
I've checked that location and that line is not commented out.
I'm using Magento community 1.7.0.2
There could be few reasons behind this:
The block is removed from local.xml file in your theme. Go to your theme and open "local.xml". Check if "checkout.cart.coupon" block has been removed.
The phtml file might have been altered. Go to your theme and open "checkout/cart/coupon.phtml". Check if it has been modified.
If you still run into issues, try changing the theme to the default magento theme from Backend/admin. Then verify, it should come up by default.