My persnoal opinion is that going with a watch battery isn't worth what you give up with the 9V. You'd lose capacity, pay higher prices for the batteries, and only thing gained is space. In a project like this, where you're putting the circuit behind chest armor instead of something small like a blaster, the benefit of a smaller package isn't substantial.
Just for the sake of an example, for those that have seen my light set, the reason I made the second board on a cable was because of all the room in the chest area. The display could set in its required position, and the other board could balance it out under the other chest plate. It could have been reduced to a smaller board, but with all the room in the chest area, why? Hope that made sense (with regard to space savings of the battery that is).
ATM