Touch spells...well, they're kinda not what Skyrim is going for. If the devs are telling the truth when they say they want Skyrim to have a more brutal feal to the game, in my mind a good way to do that would be to chance touch spells to punching spells. A fire touch spell in a characters left hand and an ice touch spell in their right, which would have visible effects in the world such as the left handed being covered in a sheet of ice and the right one to be aflame. The spells would last for a set amount of time, and the power of the flames or the hardness of the ice would be determined by the spell one is using and how effective they are at using destruction magic.
The inherrant problem with this is anyone who wishes to use hand to hand has to then also choose destruction. I can't really think of a great way to fix that, but an okay fix could be to think of hand to hand as a magic school that stands on its own. The higher hand to hand skill, the stronger power attacks that use magicka to add power to them. With magicka fueling hand to hand instead of stamina, hand to hand would no longer need to be held to the relm of realism and taking on larger enemies with your fists would become believable for those who think a hand to hand fighter shouldn't be able to punch through armor.
Destruction magic would deal with damage dealing ranged combat, and hand to hand fueled by magicka could cover the close range more physical magic battles. Its...not a perfect fit, and probably isn't going to happen this time around. However...hand to hand really does need some attention. I really love playing as monks, but they are sevearly underpowered and underdeveloped as it stands. Be it weapons or magic, the combat style needs an overhaul.