one thing I hate about java development are their IDE's, and configuration/setup involved to initially get going.
does grails have these issues? from the looks of it, it seems you need a command line open and then any text editor will do. (apart from a mysql and tomcat install).
are these assumptions correct or its better to get eclipse setup also?
I would recommend NetBeans over Eclipse for Groovy/Grails development. I like Eclipse for Java, but for Groovy/Grails the support in NetBeans is vastly superior. I can't speak to IntelliJ directly, but I have heard good things.
You are correct in stating that an IDE is not strictly necessary, and its advantages are less in Groovy compared to Java. For instance, code complete is a much less exact science with dynamic languages. Still though, I do find it convenient to have the project structure more easily navigable and syntax highlighting is good for catching pesky missing quotes and other things the IDE can identify.
This is really a matter of personal preference. The arguments for and against using an IDE when doing Grails development are more or less the same as for any other language though the case for an IDE is weaker when using a dynamically-typed language like Groovy.
A lot of Groovy/Grails developers seems to use a text editor (TextMate on the Mac is particularly popular), but personally, I use IntelliJ.
Since about 4 months I'm working with the SpringSource Tool Suite; for me (personal preference!) this is the most intuitive and balanced IDE to work with.
Before, I used IntelliJ, Eclipse and NetBeans, in this order, and every IDE had something disturbing. IntelliJ was fast and comfortable to work with but expensive and the community verion doesn't feature Grails integration; Eclipse has/ had an awful Groovy/ Grails plugin and crashed all the time; Netbeans was terribly slow and the interface is not that intuitive (for me).
STS impressed me with 'just working'. I haven't discovered any killer features yet, or it isn't incredibly fast, but I like to work with it.
On the other side, I've also developed smaller apps just with a console and a text editor (with java source code highlighting :-) ... but only non-productive ones.
Our team has tried the three big-dogs (NetBeans, IntelliJ, and Spring STS). As noted above, all have pros and cons, but we ended up settling on NetBeans as the most well rounded for our needs (which includes Maven). You should try them all and see what you think. The good news is that the projects are self defining, so you should be able to swap between IDE's with minimal pain.