Our Monte is doing the same thing you describe; we are training only to the pads, because of our Wisconsin weather . . . (our FIFTH snowstorm already this year is happening right now!)
Monte is five months old and sometimes gets close to the pad, but then stands there and pees, missing by a foot.
We're starting to think that if we don't have the cleanest pads / newspapers there, he won't go on them. (If he peed earlier and we didn't pick up the entire newspaper, then he won't go near it.) That's part of our problem.
When he poops, it's sticking to his butt sometimes and then he runs away, leaving it fall wherever it may. At first we thought he was pooping wildly, but now we realize we have to cut his hair shorter on his hinder, or SOMETHING. He's not really missing the paper, the poop is just traveling with him.
Sometimes I think Monte has to train us, more than us having to train him.
Also, with his small bladder, we just have to remember to get him in there more often and praise him like crazy when he gets it right. The "Yorkies for Dummes" book says they may not be fully trained until a year, and that's if we're consistent about it!