I'm imagining it will loosen over time. I do the same 'outer edge' technique too.. it feels as if your thumb would slip off if you moved it from the middle.
For what it's worth, I didn't think the GP32's stick was over precise for diagonals, the PSP's was horrendous, the DS knacks your hands after a short while and, slightly less related.., traditional joysticks (for your Amiga etc) were a right bugger at times. We've been spoilt by Playstation and Gamecube controllers, people weren't even happy with the Xbox's which in reality is a pretty solid controller.