Good news everyone,
I had bought my Kobo touch with extended Instant Replacement Warrenty(3 years) and managed to convince the shop assistant that my device was faulty. Sadly no more Kobo units were available and discontinued. So instead I got a Kindle 5 Non-touch(Even got the price difference back in cash
After using the Kindle for 2 days, it does seem to be smoother and more reliable(This will need some more testing though) considering the Kobo Touch froze three times while trying to set it up. It is more responsive(probably due to physical buttons rather than IR touch screen) but takes some getting used to the navigation system and on-screen keyboard. Using Calibre I had no problem converting my library.
It sure was the best fix available to me.
madchen- I'm not sure what could fix this as I sure couldn't. One thing which improved things was setting the device to power off after 30minutes of no use(not sleep, but fully shut down), as I often found the KT to freeze after long periods of sleep.
Tacty- i agree that at this stage the Kobo Touch doesn't seem like a quality product anymore.Maybe I should have gone with one of the newer models but they weren't available in my area. I for one won't be buying from them anymore(especially since i realised they own Play.com who refuse to ship all of the cool stuff to Ireland )