Date: 5/13/2009 8:42 am EDT
I can't belive I missed this one! I'm so sorry Joe.
You're correct, a 1/4" gap is left at the walls and tub( you could make the joint at the tub a little smaller if you like)and the gaps are never grout because the grout isn't flexible enough. A flexible sealant is placed at the tub and walls, this will provide a watertight seal and still allow for movement.
The grout is waterproof, but it isn't flexible enough to create a proper seal along a wall or tub. When the structure move the bond is broken where the grout meets the wall or tub and then water is able to get past.
Hope this helps. Sorry again for the delay.