The 1.9.5 firmware update (full details here) for the Kobo Touch adds a fully featured text adjustment menu. There is now a slider to adjust margins, a slider to adjust line spacing, and a slider to adjust font size. You can also select left aligned or justified text.
Most importantly, there are new Fonts! The Kobo Touch came pre-packaged with Avenir and Georgia. Now it also has Amasis, Delima, Felbridge, Gill Sans, and Rockwell.
You can even add your own fonts! There is room on the font menu for five more fonts that you can load yourself. Just make a folder called fonts (not Fonts) and put the OpenType or TrueType font files in there. Right now I have Bookman Old Style, Calibri, Charis SIL, Segoe UI, and a modified version of Nimbus (not fully functional on the Kobo) made by the mobileread forum user delphin.
I've also tried Book Antiqua, Cambria, DejaVu Sans, DejaVu Sans Mono, DejaVu Serif, Droid Serif, Garamond, Garamond Premier Pro, Liberation Serif, and Minion Pro.
Note: Italic and bold text in side-loaded books seems to have been broken by this update.
My wish list for future updates: Dictionary and highlighting for side-loaded books, library sorting options (Author, Genre, length, etc.), a notepad, first line indent.