It pleased our Lord that I would sometimes see this vision: very close to me, on my left, an angel appeared in human form... In his hands I saw a golden spear and at the end of the iron tip I seemed to see a point of fire. With this he seemed to pierce my heart several times so that it penetrated to my entrails. When he drew it out, I thought he was drawing them out with it, and he left me utterly consumed by the great love of God. […] The pain was so sharp that it made me utter several moans; and so excessive was the sweetness caused me by this intense pain that one can never wish it to cease, nor will one's soul be content with anything less than God. --St. Teresa of Avila--
I have male friends who say that they prefer the nonsexual, intimate embrace (yes, cuddling!) to sexual intimacy. However, they say that while a man is sexually aroused he can't enjoy such an embrace because his strong sexual desire overpowers any other feelings. This is why some people (of whom I am not one) will say that a man needs sexual fulfillment so that his mind can be freed for other things--as if man is so controlled by his libido that it's not possible to function as a normal human being without frequent, periodic sexual release. (Say it ain't so!)
Due to the Fallen human condition, often physical touch can cause one to experience sexual arousal regardless of his/her relationship with the other person (e.g. stranger, teenager, family member, same sex person, etc.). Often this happens on its own, without an action of the will. Sometimes such feelings can be misinterpreted and cause a person to sexualize the relationship. The disordered sexualizing of an otherwise healthy relationship (e.g. close friendship) can lead to experimentation and labeling of a person's sexuality (e.g. bisexual) or, at the very least, the loss of that relationship. But the reality may be that this person also experiences normal sexual reactions and simply needs to learn to avoid sexualizing relationships. If every fleeting instance of sexual arousal must be scrutinized as evidence in determining one's sexual identity, then no wonder people are so confused.
In addition to the physical reaction, humans experience intense emotional reactions. For women especially, an intimate relationship can lead to unhealthy levels of emotional attachment. Lovers should not meet in 'sweet slavery' to one another but rather should achieve unity of heart. This is not fulfilled by infatuation with and unhealthy dependence on the other. And just as we can sexualize any relationship, we can also develop disordered emotional attachments to any other person (spouse, sibling, coworker, even kidnapper: e.g. Stockholm Syndrome). None of this suggests that we should avoid closer personal relationships altogether, but we should be vigilant and discerning in all things.
Because Jesus said that no one is married in the Kingdom of Heaven, we know that everyone will be celibate. But we know that we won't be suffering because of it, so we must be freed from sexual urges and emotional attachments. We will be emotionally fulfilled by God and our emotional reactions to other people will be perfected and purified. So we will be able to form close relationships without disorder. In fact, the physical, mental, emotional, and spiritual perfection we obtain will set us free for chaste physical intimacy with others. There may be a lot more physical contact in Heaven because we will no longer battle sexual urges. We will be the disciple whom Jesus loved, reclining on a loved one's chest.
However, eternal life without sex does not mean life without passion. The truth is, we will not need marriage because we will have a nuptial relationship with God. Remember, in Heaven we are all invited to the Wedding Feast of the Lamb. Jesus is the bridegroom and each one of us belongs to him in a special way. We will have a passionate relationship with Jesus--a relationship of lovers, as described in the Song of Songs. We will experience God's jealous love that fulfills all of our desires without sexual intimacy. We will be like Teresa of Avila in spiritual ecstasy. And if our experience of God's Heavenly Eros is anything like St. Teresa described it then, indeed, who could be content with anything less?