You will need to include the SoftwareSerial library. There are two examples under the arduino->file->examples->software serial.
If you want to do this, I may suggest you check out my own design of a serial display. I'm in the process to update its firmware to support a rotary encoder and a button so your arduino just needs to read serial to find out if a button is pushed or the encoder is turned one detent up/down.
http://www.inmojo.com/store/liudr-arduino-and-physics-gadgets/item/serial-lcd-back-pack---phi-panel/