Yes if the bottom pipe is staying cold then it sounds like the thermostat isn't opening up. It should stay cold until the thermostat opens and then get very hot quickly.
The new thermostat should fix the problem.
You can test the old thermostat when its out by boiling it in some water, you should see it open when the water gets to the right temp.
The fans won't be kicking in because the fan sensor is in the rad and the hot water won't be circulating past it. Whilst the system is drained it may be worth fitting a new fan sensor to the rad (they're preety cheap) just to make sure. The top hose will be getting hot because it will draw heat out of the head flange but the heat won't go far enough back to activate the fans.
If it isn't the thermostat then it will be the water pump itself - but thats another scenario.
Change the thermostat.
Paul
Sounds spot on to me. Fixed the same problem on an Audi 100 Quattro a couple of weeks ago, and you wouldn't want to change the thermostat on that!
Just to add, if you are still getting constant hot air from the heater, then the water pump must be working.
