The simulator is a fantastic tool for developing software, particularly algorithms.
Having developed a couple of programs using the Touch commands, I can say that the simulator is not the place to develop Touch-interfacing software.
You really need to develop your software in conjunction with your proposed hardware. "Touch" controls that may work really simply and easily in the simulator do not transfer well to real-world hardware. They are not like button presses and behave differently to analogue inputs. Touch is affected by your hardware (Eg dielectric), its proximity to electrical noise (Eg fluorescent lights) and the current flowing in adjacent pins on the PIC's ports. The issues are not exclusive to PICAXEs.