Perhaps one of the reasons that German grenades seems so effective is actually because they are blast-only and not fragmentation. I seem to recall reading somewhere that when a German soldier threw a potato masher, he could follow it right into the enemy position, whereas an American could not, or risk being cut down by the shrapnel cloud of his own grenade. Keep in mind that when soldiers in CM are depicted as throwing grenades at each other, it is actually (I think) an abstraction to show that hand-to-hand combat is taking place. It's possible that the Allied troops panicking and breaking when being the target of a German grenade attack is actually because the Germans were able to overrun their position before the shock of the grenade had worn off, as opposed to American troops who had to take shelter from their own grenade and therefore could not charge the German positions as quickly.