Does it matter which way I turn my hand for the circular motion?
Yes, generally the dominant hand moves in a forward, outward circle (away from your body, then back around toward you) while resting on the base hand. Think of the natural, ergonomic way you would turn a crank handle.
How many circles should I make?
Usually, two small, quick circular motions are perfect for the noun 'coffee'. If you do too many circles, it might look like you are emphasizing the continuous physical action of grinding rather than simply stating the noun.
Should my hands be touching the whole time?
Yes, the pinkie side of your dominant fist should maintain light, continuous contact with the thumb and index finger side of your non-dominant fist as you make the circular grinding motion.