Bubblenesting is not a sign of contentment or happiness--it is merely an instinct, some do it more than others, and it can be triggered by certain factors, but I would not interpret it as a sign of happiness. I have seen very sick fish make bubblenests.
Do you know your water parameters? (ammonia/nitrite/nitrate) I am assuming this tank is not cycled, and if that is the case, you should be doing 100% water changes every 4-5 days, if you can do partial changes in between, even better. Fish constantly excrete ammonia through their gills, and this ammonia can build up to a point that it begins to burn the fish, this may be causing the flashing you're seeing. The only way to get rid of ammonia in a closed system without any plants or bacteria is through 100% water changes--you must clean everything out with hot water with every change to make sure no waste is left over to rot and produce more ammonia. Large glass pebbles/marbles are fine, except that because of the size of the pieces, food and waste are more likely to slip through the cracks making cleaning more difficult.
As for the heater, I highly suggest ordering online. Ordering your supplies online is much cheaper, per item you tend to save around $10-15, which more than covers the shipping. I buy all my supplies through this site: http://www.fosterandsmithaquatics.com
they offer a variety of small heaters--I use 25 watt adjustable hydor theos. Smaller cheap ones are generally of poor quality, and may cause harmful temperature fluctuations. Also, if your betta ever becomes ill, you will want to adjust the temperature higher or lower depending on his illness.