Jules,
When I cannot get my boat to settle down; that is, I cannot keep it with the windward hull just touching the water a large percentabe of the time. I will travel out a little, until I feel like I have control of my boat. Going upwind, you will always want your traveler as close inboard as possible. When you travel out it changes the angle of attack of your sails to the wind; therefore, you cannot point as high. You have to learn to watch the gust and drive up into them; this is tricky, because if you drive to high, you will kill your power or tack un-expectedly.
With time, you will notice that usually before a big gust, the wind will lull a little. This makes boat handling tricky. I always drive off in the lull, to keep my boat speed up, wait for the leading edge of the gust; if it is a lift, then drive up to find the grove; if it is a header, then you are in the position to drive off with it.
When the winds are gusty, learn to sail with your traveler in as close inboard as possible. I will ease my main, when I miss read a gust, and it starts taking advantage of me. I never work the traveler going up wind, except when I need to let it out a little to help me handle my boat better.
When I sail my boat solo, I will travel my jib way out and sail on the main only. I will keep my main traveled in close and adjust for the gust by easing the sheet.
You should keep in mind that sailing a Hobie 16 is like sailing a mono sail boat. The jib is most useful when it come to tacking. If you sail too far off wind, it can flip you over.
David