General: 

In Sections 2 and 3 you present a conceptual framework for handling,
what you call, "physical contact" for wireless devices. Related
concepts has been previously introduced in the literature by various
authors under names such as: pre-authentication (Balfanz et al.),
imprinting (Stajano et al.), proximity-based (see:
www.geekzone.co.nz/content.asp?ContentId=6742 ), location-limited
channels (eprints.eemcs.utwente.nl/5694/01/00000174.pdf ), touching,
manual authentication, etc.

At the end of Section 3, you define what "physical contact"
means. From the definition it is difficult to tell how the new concept
is related to the existing ones. Is it just everything, key exchange
protocols and physical sensing devices put together? What kind of
perceivability of the surroundings is needed? What is users' role in
"physical contact"?

In Section 4, some examples of protocols (4.1 Authenticated
Diffie-Hellman protocols from [4]) and one example of "physical
contact" (visual channel using barcodes and LEDs) where presented.
  
Did you have Jukka's master's thesis available? It gives a survey of
existing ad hoc association protocols, and some examples of "physical
contact" technologies. To my understanding, your task was to analyze
more extensively what "types" of "physical contacts" would be possible
to implement with various "types" of existing protocols. You did not
even start working to this direction. The first thing to do would be
to look at how classification of the protocols, on the one hand, and
of the "physical contact" technologies on the other hand should be
defined. For example, what kind of properties the protocols should
have to allow visual channel to be used?

In your writing, you use technical terms quite carelessly. You should
pay more attention what is the conceptual meaning of each term you
use. For example, you write: "How to build up the basic trust and
exchange secrecy (i.e., keys)... ". First, secrecy is not exchanged,
and secondly, the keys may be exchanged to provide authentication
only, if secrecy is not needed.

Editorial and other detailed comments (a short list):

Section 1:

- adjusting heating device according to thermometer is not very "complicated"

Section 2:
 
- master-slave (not: master slaver) 

Section 3.1 

- listen to the communication

Section 4.2

- It resembles 

- this design puts high