It is very interesting that the wristwatch beacons 'interfere' with the aircraft ones, this doesn't happen with the military beacons we wear so maybe the problem is not the wristwatches but the choice of crew and aircraft beacons.
Just to clear a couple of things up, 121.5 and 243 are not monitored by the COSPAS/SARSAT satellites any more so therefore there is no satellite alerting worldwide for these frequencies. However, all SAR aircraft can home to 121.5 beacons and this is the reason that the newer 406 beacons also transmit on 121.5. The new beacons transmit the identity of the beacon and can have a GPS position added to the message if there is a GPS receiver also built into the beacon.
Therefore a SAR asset would proceed to the lat and long of the beacon as transmitted to the satellite (and then downloaded to earth station and processed by the MCC) and then, if required, fine tune the homing using 121.5.
Personally, I like the idea of individual beacons since, in the confusion of a multi casualty situation, a single survivor who has drifted outside the immediate rescue area is less likely to be overlooked.