Many times when I'm doing power chords I will inadvertently let my index finger rest against the high e string. Since I'm not playing these strings anyway with a power chord it doesn't change the sound of the chord but is this considered incorrect technique or will it cause problems if I don't focus more on hand position? I have relatively small hands and it is difficult and deminishes my accuracy to put more arch in my fingers than I already am.
Personally I like to mute the E string with my middle finger when playing power chords on the A string, just to be sure I don't get unwanted sound out of it when playing the chords. As I get more accurate with my picking hand I'll probably worry less about it, but for now it helps.

As long as you're muting it and not actually pressing it with the index finger I don't see how it would be a problem.
From what I've seen that is actually desirable, because it keeps a strings/note that isn't part of the "chord" from ringing out or being able to vibrate.
I play with all notes muted except the 2 or 3 that I will let sound. so use your index finger rest on all the string..
Quote by RetroGunslinger
this is like comparing a flushing toilet to a hole in the ground
It doesn't matter, except that when you play acoustic, there are several simple chords starting on 2nd, 4th, 7th, and 9th frets, like starting on string 3 I think, that are a basic power chord shape, but you strum all of the strings, or at least the bottom 5. If you get into the habit of muting these strings, playing these other chords may cause you grief.