Gwen's biggest fear is going to be being forgotten. Her dream will have everyone forgetting who she is. Even her own father will appear in her dream, not knowing who his own daughter is.

I'm going for option two for her. At first, it's going to be little day dreams here and there, and then the dreams are just going to just consume her, to the point where she'll believe she's completely invisible.

For the people that touch her, they will merely not realize they've done anything. They won't forget her if they just touch her, but if they touch her for long enough, they'll forget her as well (if I'm getting this right... or is it they'll be forgotten as well??). Either way, forgetting will happen.