Dear Amarpal ji,

I agree with your interpratation of Panch meaning 5. Let me relate you a little story about it that my grand dad told me when we were talking about this particular pauri many moons ago. He passed in 1988 at the age of 98.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/jap-ji-sahib/299-japji-sahib-pauri-16-a.html

Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/showthread.php?t=299
He said and I am paraphrasing it that Guru Nanak as a visionary knew a lot of things what modern man is still trying to find out.We have 5 senses that makes us check our surroundings, 5 fingers together have more of a grip to anything we hold in our hands as compare to 1 or 2. 5 Toes help us balance ourselves and makes us start our physical journey. The whole idea of PANCH in the Pauri is looking inwards at ourselves so that we can reach out.

Guru Gobind Singh ji took this idea of Guru Nanak a bit futher by having Panj Piyaras.

Peace & Love

Tejwant