Flexible Watch Circuit Parts
To start with your last question: this really looks like the weakest link in your project. Flexible PCBs are not made to work under mechanical stress.  

  

They're often in a fixed position and the parts which can become under mechanical stress (like user controls) are always fixed, either with a screw, or with a molten piece of plastic. In particular the parts of the flex-PCB which have components soldered on them should not flex, as creepage may cause solder connections to fail in time.  



This is more of a mechanical than electronic problem, but I would make sure that there's always another mechanical part which will take the stress when flexing. It could also shield the PCB from touching.

As for the package, it's true that QFN is becoming more popular, but most microcontrollers are still available in LQFP/TQFP (Low Profile Quad Flat Package/Thin Quad Flat Package), with pitches from 0.5mm over 0.65mm to 0.8mm (wider pitch usually on devices with less pins).  



The last one should be rather easy to solder, and even 0.5mm is doable with a fine tip soldering iron and a steady hand (ask your dentist! :-)).
It's hard to select a microcontroller purely by package, so maybe you could give us some  details, like number of I/Os.