A modest defense of arm-pulling...
One thing I try not to do is embarass my kids in public. I don't want to cripple their developing confidence and self-identity, so often instead of, for example, raising my voice and wagging my finger while in the main aisle of the store, I will pull the unruly child aside (firmly, but probably not in the manner of arm-tugging some of you are referring to) and speak to him or her (I have one of each) calmly but firmly. In order to do this it means I must grasp the child's arm or collar and guide him where I want him to go. I do try to be aware of their fragile bones and joints, and I try to not make a big scene out of it because what is important is that I get my point across to my child.
FWIW, swats on the butt just never have worked real well with my kids. Not that I am against it, but it has simply not been effective.