Yes, the level cap is because of the balance. Everything above 21 is - at least at the moment - bad for the character development. You will get jack of all trades characters every 10 meters if we don't limit it by levels. We want the players to think about what character they want to play. The "first I put some skillpoints in small weapons, then big weapons, then energy weapons and then points into the other skills"-tactic will not work anymore.
We already saw it in last open test... some players hit level 20 after two days and 40 after a week.
Also leveling up should be slower now in general. We don't want to make a MMO where your only target is to grind for level up. We are roleplaying fans and so comes grinding and leveling up for us only on the second position.
Also I personally hate grinding. It is imo really bad gamedesign-bullshit.