Polylines have been updated in AutoCAD 2011 allowing you to add and remove vertices without having to access the PEDIT command!
When you select a polyline, AutoCAD displays the traditional endpoint grips as well as new midpoint grips. If you hover over a grip (don’t select it, just pass the cursor over it), you’ll see menu options for direct manipulation. The options vary slightly depending if you hover over an endpoint or midpoint grip.
The Add Vertex option adds a new vertex next to the one you were hovering over. The side on which it's added depends on the direction of the polyline (You can use the Reverse tool to change the direction of the polyline). When adding a vertex, a plus + symbol is displayed at the cursor. You can just as easily remove a vertex from a polyline by hovering over an endpoint grip and choosing Remove Vertex.
Remove Vertex is not an option when you hover over a midpoint grip. Instead, you’ll find an option to Convert to Arc.