Does Towns shy away from contact? Even if he's not a true center, with the way the league is shifting, it'd make me think Towns and Randle could work in the front court. He's already blocking twice as many shots as Okafor. I'd much rather have the guy who's already committed defensively than a giant question mark at that end of the floor.
He's getting better at playing with contact, he's been on a roll lately and has been pretty physical.
I don't think playing him at the 5 would be the best way to maximize his talents, he's athletic enough to cover PnR's and he'll have a height advantage over most PFs if you play him at the 4. The best way to utilize him is playing him next to a legit center, I think you're overestimating the move to smaller lineups, the vast majority of the best teams in the league have big centers.
You're right though, his defense is already way ahead of Okafors, and those blocks he gets are in 10 less minutes than Jahlil. I think the Lakers would give D'angelo Russell a serious look at 1 as well, you have the worst collection of guards in the NBA right now.