Any material that has even the tiniest bit of conductive capability can be a touch sensor with the Makey Makey.

FORBES: Makey Makey Hits $568,106 and 11,124 Consumers Said Yes

My thought about the iWatch is it will simply be a sensor package that has as an additional capability, the ability to accurately track time (synch via network connection for time correction).

FORBES: How Will Apple's Mythical iWatch Break the Laws Of Physics?