1) Can you clarify if you are using exploded deployment, that you are starting the server in Debug mode ? If you are using the Servers view to launch Tomcat and are selecting “Run”, you need to stop it and select “Debug”… the server has to be running in Debug mode.
2) Also,please make sure that “Project -> Build Automatically” is switched. Hot code replacement works (only?) if automatic build is switched on.
3) Can you switch to a new workspace, create a new project with sample java files and check if the hot deployment is working ? It might also be a workspace/cache issue.
4) Can you also check the .log file which is located at <workspace dir>/.metadata/.log for any errors of interest ? If yes then paste the errors here for us to investigate further.