Go over to www.schluter.com and look at their Dilex line. This is a tile-in expansion joint that will allow you to eliminate the grout in that area, and there is a different one that can be used in the corners so you'll have no grout in the shower at all, at least for those junctions.
Prior to installing the cbu, you should run a vapor barrier down the walls and overlap it onto the tiling flange of the pan. there are several alternatives, too. RedGard by www.custombuildingproducts.com is a paint on surface waterproofing material or Kerdi by www.schluter.com is a waterproofing membrane (sort of like wallpaper, but waterproof) that would keep moisture out of the backing. Putting waterproofing immediately under the tile has great advantages since there is so much less to dry out inbetween showers.