Should one terminal of the AC source be grounded?
You must connect both terminals to your circuit, obviously. 

If it's a "floating source" (as these simulation sources, and some - but not all - real sources are), then neither terminal needs to be connected to ground.

AC mains is not a "floating source" as Neutral is connected to ground somewhere (at the substation, if you're in the UK). However, AC mains connected from the secondary of an isolating transformer is a "floating source".

Now, both for simulation and real life, it is usually necessary that there is some path between at least one terminal of the AC source, via some impedance, to ground. 

In simulation, that impedance can be high - a nominal 1 Gigohm may do - to establish the initial voltage conditions and allow simulation to converge. Or the connection may be provided by a pair of resistors, connected to 0V and +5VDC, to establish 2.5V DC bias. Or some other approach.

In real life, there will be a similar connection - often via a TVS - to prevent static electricity building up on the otherwise "isolated" circuit, which could otherwise damage the insulation on the isolating transformer.