Pointed Discussion

I'd make some terrible wrestling pun but all I know about the "sport" is that there is (was?) some guy named undertaker.

Here, I'll help.
DEAD MAN WALKING *boot boot boot*

Does it need a legal target to activate the ability?

This card is preposterously good in a madness deck. I was dumbfounded by how quickly it declared itself a target.

I'd much recommend Tortured Existence.

My favourite utility creature (in second and third places I'd place Llanowar Elves and Merfolk Looter, respectively). It's doesn't hurt to drop this early game, and later it gives you such a wide range of options from whatever cards you have in hand (specially if you have madness or some kind of graveyard shenanigans, which you probably do since you're playing black) that it becomes priceless. It's much like a Fauna Shaman.
If your opponent realizes this can probably be a bigger threat than any other creature you may play, you also haven't lost so much since he's used removal in your 2 drop, clearing the path for your bigger creatures. Then again, if you are running any other kind of graveyard shenanigans, you can get Undertaker again without much trouble.
Add some nice flavour text and art (I really like older Magic style like this - I like new art too, but they just don't print this kind of painting-like pictures much anymore), and you've got a nice 2-drop.

This card (and Gravedigger) are just begging to be screamed in a booming, wrestling/monster truck announcer voice.

@Rakados_Ninja: You can activate this ability without any legal targets. It will just get countered, but you can still pay the cost.

tombstone stairwell
goblin piledriver

@Jl2736: Incorrect. Naming a target comes BEFORE paying the cost, so you cannot pay the cost (and resolve the ability) if you have not named a legal target.

this combos well with gravecrawler to get the stuff you want without losing much but 2 black mana essentially.

Similar to Tortured Existence, just a few dredge creatures in your deck effectively gives all of your guys "{B}: Dredge X" (where X is whatever the first card had..)

Stuff like this works amazing with Stinkweed Imp as it give you a 5-card dig for your creature. Shriekmaw is a good example of a powerful combo with this. That said, I'd rather keep it in enchantment form. This guy can attack, be reanimated, etc.. but enchantments, especially 1-mana unimportant ones, are annoying to destroy. There are trade offs, but I too recommend Tortured Existence.

one important difference between Tortured Existence and this:
this lets you discard ANY card, not just creatures;
throw away extra lands, good for Worm Harvest, etc

this is also a creature, so if you happen to dredge it, crypt of argadeem on the field, it boosts your creature count, unlike existence. plus tortured existence only lets you discard creatures.
and it can chump block :D

Except with this you can discard noncreature cards