Yup - because the language extensively uses tail call optimisation, inlining and other rewriting in the execution it used to be hard to reconstruct the original state of the code on a run time failure. It is less of a pain than it seems not to have line numbers in error reports - but it is still a pain.
Actually, the inliner is not used unless you explicitly enable it (for the core). The runtime BEAM backend may decide to inline as well, but that is another part entirely.
But yeah, it is not much of a problem having no line numbers when your functions tend to be of a 4-5 line size.
Erlang R15 brought some nice features, like (FINALLY!) line numbers in error reports, there will be a better (built-in) dict rather soon.