Some thoughts...
- Not sure about putting the power switch on the low voltage side even if the power module only consumes 0.1W with no load. I think it would be nice to be able to kill the power to everything if like the relay failed.
-You'll want some filtering capacitors on the output side of the IRM-10-5. I'm not an expert on such things, but from other schematics I've sen probably 0.1uF, 1uF and a 10uF in parallel would be a good idea.
- Here's how to perform level translation using the ULN2003...
MTOx represents an output pin of the touch sensor chip. MTOx_IN is the atmega1608 GPIO pin that will read that output. Q1 is one of the gates on the ULN2003. The pull-up resistor can be the GPIO pin's internal pull-up (so it doesn't have to exist on the PCB). This method might consume 1 mA (maybe less) while the output signal is high which is most of the time, so it isn't economical on power, but then you're not running on batteries so that's not too much of an issue.
It would make things a lot simpler to find a touch sensor which runs at 5V.
- You have to push both SW1 and SW2 in order to change the SWOUT line -- is that what you intended?
- Are the LEDs connected to the ULN2003 just simple LEDs or something else? The atmega1608 can drive modern LEDs directly -- you get good brightness with just a few mA of current. Usually the ULN2003 is used to drive heavier loads.