They got caught up it the whole six skills to every archetype and ran out of skills. :shrug:
It's likely hand to hand only causes fatigue damage, so wouldn't expect to see a dragon passing out any time soon.
I think they got to 5 skills with the thief and they got stubborn with their idea of HtH, athletics, and acrobatics being removed. I can't think of any other way something as bad as pick pocket became a specific skill when everything else in the game was about broadening skills and removing redundant features. Pick a stream either specific skills like pick pocket and short blade, or go one handed and add a skill like body mastery and have it govern athletics, acrobatics and HtH.
It will still be in the game, I could care less, though. A TES game isnt made for a strictly hand-to-hand fighter. Combat like that would get boring quick, and its unrealistic. How could you expect to defeat some of the huge creatures that will be in Skyrim with just your bare hands?
Yeah it make so much more sense when you tackle that dragon with a dagger between your teeth. Unarmed or armed this stuff makes no sense. HtH was an awesome skill which defined a few character types and now its gone.