I wish Apple would put out a statement in laymans terms for the benefits of this design so people wouldn't be so worked up.
I'm an RF engineer with an EE degree and 10 years of experience. By touching the antenna your body becomes part of the circuit, essentially making one large antenna. This improves reception considerably. Remeber old rabbit ears on your tv? You use to move them with your hands, when you touched them the picture was clear, as soon as you let go it got worse? It made it hard to tune them in. Same thing applies here. The bars decreasing when touched is a software glitch because the impedance has changed on the circuit, the software is simply calibrated to not being held.
As far as shorting it out, some simple isolation barriers take care of that, so no worries.