Dreamhost (and a lot of other shared hosting providers) don't allow access to the mysql table where permissions, etc. are set plus the grant SQL commands are disabled. It keeps people who aren't DBA's from messing up other people's data.
Some other consequences of this are that you can't set permissions for a user at the table and column level, only the database level.
To get full MySQL access, you would need to have a dedicated (your own) server.
I added this information to the MySQL WiKi article http://wiki.dreamhost.com/index.php/MySQL a while ago.