He gets hysterical? That is not okay. If you're the one feeling uncomfortable and he's upsetting you even more, that's a big problem.

Not to mention the fact that you have to give in to calm him down is outright manipulative.

How much do you really like this guy? You seem sure that he's a good guy but you seem scared of him. As mentioned previously in this thread, it's very possible that you just aren't ready for sex. Maybe the problem is you don't want to have sex with him. (It sounds like you're scared of him, which would pretty clearly explain the disdain of being touched) But either way, if you can't have a rational conversation with him about your feelings and insecurities without him getting upset then things are only going to get worse.