I had the same issue with my Kobo Touch for a while and had to do a hard reset to restore what I would call normal functionality to the touch screen. The problem started after I started using it with Calibre, and I also saw the same storage error warning reported on this thread at MobileRead after I would eject the Kobo via Calibre. I ended up doing a hard reset and, per that thread, I eject the Kobo via Finder on my Mac now (or the sys tray in Windows) rather than through Calibre. It's been a few weeks and the touch screen is back to normal, I can tap anywhere on the right or left side of the page and it responds without a lag, and I haven't had any other problems with it.

Note: If you do want to do a hard reset and can't access the Kobo's menus via the touch screen, you can still do one by powering the device off and holding the home button while it's powering up. After you reset you might want to leave it connected for an hour or so just to ensure it's fully charged. Good luck!