Rob, regular Metformin is well known for causing GI upset with the most common side effect being diarrhea, but gas, nausea, indigestion and stomach pain are part of the GI upset picture as well.
Metformin ER tends to not produce those symptoms as often as the regular. Regular did give me GI upset, but the ER didn't. That's not to say that the ER can't produce GI upset, it's just a lot less likely to.
I don't think your internist is recommending Niacin to you for it's glucose lowering effects but rather for its ability to decrease triglycerides and LDL while increasing HDL. If you do decide to add it, definitely look for the 'no flush' kind or you'll develop a new-found sympathy for what menopausal women go through with hot flashes.
Your tri readings are very odd; it's not at all common to see them fluctuate so wildly on a low carb regimen. Other than carbs, alcohol and transfats can have an impact on triglyceride readings.
Also keep an eye on your blood glucose readings because some studies suggest that Niacin may increase blood glucose readings (note I said
may, not absolutlely will) so if you notice no change in your readings or an increase, that would be the first thing I'd suspect.
Re low carb and lower fat, I suspect your internist is a fan of Agatson and South Beach which is a lower fat (but higher carb) plan. If you follow Bernstein or Atkins, your percentage of calories coming from fat are going to be higher than South Beach without a doubt. OTOH, that doesn't mean you can't tweak the percentages on what you're currently doing in respect to percentage of calories from protein and fat and see what effect it has on your readings if you're so inclined.