RE: K-Touch jumping forward
Do you turn pages of your book by swiping instead of tapping the screen? Because a swipe up on the screen is supposed to jump you forward a chapter, so maybe that's what is happening? I know what you mean about having page turn buttons though, if only they would keep them along with the touch screen. The Paperwhite might suit you better because it uses a slightly different touch screen than the Touch, it's capacitive touch screen is more precise, and shouldn't be as sensitive to skipping (though you'll probably only find out if that's true for you by actually having a shot of one).
As for whether a PW would fit into the cover you have, it depends really on how the Kindle is held in the cover, though there is only a slight difference in size so it should probably be ok.
For the wikipedia page on the Kindle the dimensions are:
173 x 119 x 10 mm
170 x 117 x 9 mm
If you were to buy another e-reader, if you want one with a light similar to the Paperwhite the other option is the Kobo Glo. Barnes & Noble are coming to the UK too and they have the Nook Glowlight, it has page turn buttons, but there seem to be a lot of issues with the light layer on the screen being VERY fragile so I wouldn't recommend it. The problem with these other e-readers is that you can't read your Amazon books on them, your Kindle reads Amazon's own book format (.mobi/.azw) whereas the others all read .epub (this is the standard e-book format, and any books you buy from places like WH Smith/Kobo, Google Play, Sony Store, Waterstones etc are all in this format). So unless you know how to remove DRM and swith between the formats, it's probably easier to stick with the Kindle.