M.B.
First off, you're doing a great job and keep doing it!!
My daughter pinched around the same age too (and every once in a great while, still does) only she'd pinch my breasts.
I found that making sure I kept her nails trimmed helped. I'd redirect her hand to something else, sometimes my shirt but it's a comfort thing. Sometimes I would cry out a little bit and it would startle her (she'd surprise me with a good pinch) and I think that my reaction scared her a little and helped it stop but I can't be sure.
As for your daughter "being spoiled" NO, she's comfortable, safe and secure and you're doing a good thing. Sounds to me as though you're doing the right thing for your baby (and cosleeping does not cause problems, that's After my kids would fall asleep, as they were older, I found they'd stay asleep longer when I put them down on their stomachs not backs (never when they were younger though but after they were able to roll over back and forth) after I'd lay them down, I'd keep a hand on their back until I knew they were settled. My son had no problems transitioning to his big boy bed when it was time (he's almost 13 now!) and my daughter sleeps in her own crib but right next to our bed. Unless she's got a stuffy nose or teething, she sleeps through the night just fine.
I would look at how much she's eating right before bed (is she cluster feeding? Are you giving her a snack before bed maybe of a veggie or fruit?) and how long are her naps during the day? Is she maybe taking too long of naps?
I'd also evaluate the light in her sleeping areas. I put my daughter down for naps in the daylight but at night, no lights so she can set her circadian clock. She's pretty much down to a science as to when she goes to sleep and when she wakes up :) Make sure she's had enough to eat, the room she's sleeping in doesn't have any artificial lights, look at the temperature, is she too hot? Too cold? (since she sleeps better with you maybe she's cold?) When she does wake up in the night, try just putting your hand on her back first to see if that will settle her.
You don't have to stop nursing (and you shouldn't until you and your daughter are both ready- the formula advertisers clearly did a great job in making breastfeeding abnormal that it carries over to this day even though there's tons of information about extended nursing. Quick story, I picked up a pregnancy book from the 1970's in a book store. It recommended that if you were feeling anxious to smoke a cigarette to relax. Just because something was considered normal 20-30 years ago doesn't mean it was right.) she can learn to drink from a cup and still continue to nurse. My daughter does both just fine. :)