My stuff is theory-driven, and I've found I'm bringing in the literature all the way through like Ellay. I did do a couple of chunks of 'review' type writing in my first year, but although I am drawing on them they are not forming the basis for distinct chapters.
I've kind of come round to my supervisors way of thinking that I need to say something about methodology, because I need to prove that I know what I am doing and am competent to carry out research on my own. Having it within the thesis would really disrupt the flow of my argument though, but at the end i can use it more as a 'reflection on doing research' thing. At least that is the plan at the moment.
My supervisor is a grounded theory kind of guy, so we have had some interesting 'debates' about methodology!