Like you I have been having all the same touchpad issues. At first I thought it was ESD and troubleshot that for a few days. I finally concluded that it had nothing to do with ESD and moved on to possible driver issues. I installed every driver pack I could find, modified them, turned off driver signing in order to install the OEM drivers, used Windows 7, 8, 8.1, Ubuntu etc... but to no avail.
From the onset, some sort of physical problem seemed to be the most logical conclusion. The question was just what! I couldn't believe that synaptics could make such an aweful touchpad that was incapable of actually working. I made the assumption moving forward that the issue had to be caused by something small. During my last clean install of Windows 8.1 I noticed that the default windows driver caused the touchpad to be EXTREMELY sensitive. You'll notice that once you install Dell's latest driver the cursor movement calms down considerably. The touchpad is still extremely sensitive, the driver is just taking all that raw input and generalizing it into a more manageable cursor. Conclusion, the touchpad is too sensitive.
I compared this premise with my previous experiences and found that in large part they supported each other. My touchpad would typically freak out after a lot of 2 finger scrolling or a lot of gesture movements. In fact it would stop working entirely if I blew hot breath on it. Conclusion, I needed to desensitize/protect the touchpad... but how!?
In my first attempt I simply took clear packing tape and completely covered the touchpad. Not expecting anything I ran my finger across it and found that the cursor movement felt much more controllable. I used it for 30 minutes like this with only a few minor issues. (My touchpad ALWAYS freaks out within the first 15 mintues so for me this was a big deal!) I laid a few more layers of tape down and the functionality kept getting better and better. Since I was getting better performance with more layers of tape and because clear packing tape doesn't look great stuck to your laptop I wanted to find a better solution. I needed a thick tough plastic that I would stick to the surface of the touchpad and that didn't require me to use multiple layers of it. Conclusion, use 3M Laminating plastic.
In this second attempt I disassembled the laptop and removed the touchpad from the palm rest area. I used a Magic Eraser pad with a little water and very little soap to clean the surface of the touchpad. After it was clean and dry I cut an oversized square piece of laminating plastic and placed the touchpad face down on the sticky side of the plastic. I then took a razorblade and carefully trimmed off the excess by tracing around the edge of the touchpad. The result was a perfectly sized piece of plastic on top of the touchpad. I reinstalled the touchpad in the palm rest and reassembled the computer. (Please take note that there is a bit of grounding wire tape on the rear of the touchpad that must be reapplied during installation.)
I've been using it like this for 3 days now with ZERO problems!!! I hope Dell takes notice of this post and comes up with an actual solution. The black surface of the touchpad is itself just plastic stuck onto the touchpads circuitry using an adhesive. It would seem like the simple solution would be for them to replace it with a thicker more robust piece. One thing I did notice is that the 3M plastic is more rough than the original touchpad surface which makes it hard to drag your finger across it. When I first started my finger kept skipping on the touchpad which caused the cursor to jump around, however after a few hours it smoothed out nicely. You may have better luck using a different plastic such as a cellphone screen protector since it's designed to have fingers touching it.
Anyways I really hope this has helped you guys. I have been just as cranky about this as you and I still think Dell needs to OFFICIALLY do something about this problem! (DELL PLEASE TAKE NOTE!) In the mean time I hope this gets you guys up and running and able to enjoy your laptops once again! Good luck!