jqgrid setGridParam datatype:local

I don't want to hit the server and bring back every row when I am paging through the records by using the pager. I read that if I set the datatype = local in the complete blog in the .ajax function AND if I set loadonce:true then I should be able to avoid having to wait for the grid to reload with the data.

However, when I do these things the grid doesn't go to the next page. It just hangs...
What am I doing wrong?

jQuery(document).ready(function () {
    jQuery("#list").jqGrid({
        datatype: processrequest,
        mtype: 'POST',  
        jsonReader: {  
            root: "rows", //arry containing actual data  
            page: "page", //current page  
            total: "total", //total pages for the query  
            records: "records", //total number of records  
            repeatitems: false,  
            id: "ID" //index of the column with the PK in it   
        },
        colNames: ['Name', 'Title'],
        colModel: [
      { name: 'name', index: 'name', width: 250 },
      { name: 'title', index: 'title', width: 250 }
      ],
        pager: '#pager',
        rowNum: 10,
        rowList: [10, 20, 30],
        sortorder: "desc",
        viewrecords: true,
        height: '250px',
        caption: 'My first grid',
        loadonce: true
    }).navGrid('#pager', {edit: false, add: false, del: false});
});

function processrequest(postdata) {
...
$.ajax({
...
    complete: function (jsondata, stat) {
        if (stat == "success") {
            var thegrid = jQuery("#list2")[0];
            var jsonObject = (eval("(" + jsondata.responseText + ")"));
            thegrid.addJSONData(jsonObject.d);
            $(".loading").hide();
        } else {
            $(".loading").hide();
            alert("Error with AJAX callback");
        }
        $("#list").setGridParam({ datatype: 'local' });
    }
});
}