As much as some people malign touch screens (because of fingerprints), I think a touch screen is essential in a mobile device, and would be an asset for a Kindle device (they can keep basic navigation buttons for the 90% of stuff that you don't need a full keyboard for: page turns, menu, 5way etc.). Then they'd be able to make it smaller, or have a bigger screen in the same form factor.
Besides, it is just a matter of time before a simple surgical procedure (or genetic modification) can remove the oil ducts in one of your fingertips (and maybe adding a little dimple for better precision) to make this problem go away entirely.
Personally the fingerprint issue doesn't bother me at all with my iPod Touch until I turn off the screen.