If h e grabs it he's letting go of the full Nelson. He's barely controlling him, so it's too late to switch.
He didn't cut off his tail because it's a last ditch resort to do so. It's not like it grows back immediately if he wants it for his future missions. It probably hurts too, and maybe affects his balance. He was waiting as late as possible to cut it. It's preferable if he can talk his way out. The makankosappo never actually came his way (if it was even ready. Can't remember), so it wasn't as late as possible.
After the tail grab he had defeated Goku, so there was so longer any threat. Deal with Goku, then kill Piccolo. Easy. He never imagined Gohan would headbutt him.