Xundau tells us in an official Forum post that there will be no Grappling.

"We're striving to make our game look "real" -- as in, when you swing a sword and hit a monster, you see your character swing their sword and hit the monster (as opposed to swinging into the air somewhere in the vicinity of the monster and the monster taking damage).

If we put in grappling, we'd want the same level of realism to apply -- we'd want you to see your character tackling the hobgoblin, or the fire giant grabbing you in a huge bearhug. Unfortunately, this isn't something that's easy to do; to put in full-on grappling, we'd have to create grappling animations for every monster/player combination, in addition to dealing with a host of gameplay questions.

Never fear though -- there will be plenty of tactical options in combat. Some of them will be the same as PnP, some will have the same name but work differently, and some things will be entirely new to DDO.

Besides, did you really want to tangle with that fire giant (+25 grapple) anyway?"

No problem, I think we are all willing to give up Grappling for some intense realistic weapons combat. If only the rest of us could have experienced the Gameplay at E3. Boomjack your my hero.