Hi...this is my 1st post but just had to respond!!
Whoever suggested that fabric thing and my body not being conductive I thought what a stupid suggestion when I first read it (!!) - but I got out of my seat anyway which was fabric, took off my hoody which was fabric, washed my hands, touched a metal lamp - then the Nexus 7 screen works again!! I was at a loss and already planning to take the device back to the shop after only a week of usage. I knew it was a touch screen problem when even after a hard factory reset, swiping down on the country list didn't work, my finger would touch somewhere but another area would respond....
This was after scouring all the forums for an answer and thinking it was a pirated app, the screen guard (which i took off and now cant put back on without bubbles!) or the pattern lock software that was the problem. Well I hope it doesn't happen again when I'm sat on a metal chair....then it must be the screen problem. It might just be a huge coincidence that the screen started working again after I earthed myself....but like Master Ugwei said in Kung-Fu panda, there are no accidents in life.
Thanks again for the suggestion!!