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My two daughters (they're nine) each have Kobo WiFis. Because I purchase their books on my account, and there's definitely material in my library that isn't age-appropriate, I download the Adobe epub versions of the books I buy for them to Adobe Digital Editions and transfer the books to their Kobos that way.
If your daughter will have her own Kobo account, though, that won't be an issue for you. You can purchase the books either on the touch or through the website on your computer, then sync the books onto her touch - either through WiFi or connected to the computer using the Kobo desktop software.
The Kobo Touch will support all Adobe epub books as well as non-DRMed epubs. You can purchase them from Sony, independent online bookstores, and from publishers themselves if they have an online store. I'm not familiar with what type of ebook Waterstones sells, but if it's the standard Adobe epub format, then the books will work. You'd have to go the sideloading through Adobe Digital Editions route for non-Kobo books.
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