I can't help you unfortunately, but would like to know the same thing about both the Touch and the new basic Kindle, as I haven't decided which one to get yet... I've done this on my K3 and much prefer the smaller margins.
To add more info for others who might be able to help... In the K3 using the Words Per Line option will only get the text to within about 0.5cm of the sides of the screen, which is still a lot of wasted space. There is a system file you can access in a text editor such as Notepad when the Kindle is connected to a PC, which allows you to set the margin to values not available when using the Words Per Line option via the Kindle's own interface. The lowest you can get the margin without editing this file gives a value of 40... I find 20 to be perfect, some people go as far as 10.
If someone with a new Kindle Wifi could have a look for this file, or someone with a Touch could see if they can find anything similar, it would be great.
The location of the file in the K3 is system\com.amazon.ebook.booklet.reader\reader.pref , and the setting is HORIZONTAL_MARGIN. To see the system folder your PC needs to be set to show hidden files and folders, and not to hide protected operating system files.