The Electoral Roll should be the start point. Although government might be accused of introducing limitations to a process designed to give people easier access to local government, using the ER as the start point would offer the opportunity to confirm a genuine local connection. It might also encourage some people, who have not done so, to actually register to vote.
It would also make it just that bit more difficult for some non-local organisation or vested interest to raise a petition that promotes their own interests and not necessarily those of local people.
In respect of numbers required, I think some considerations needs to be given to the area affected and this is where the use of a % figure might be useful. If it is a ward based issue, then a certain % of residents in the ward should be required to sign. In a ward of 3000 voters it would not be unreasonable to expect at least 5% (150) people to demonstrate that the issue was indeed important enough to them, to warrant a response from the council. Picking an actual number of signatures, say 100, could lead to some multi-member wards being able to easily muster sufficient support for numerous petty and time consuming petitions.
When it comes to numbers required for a district wide issue, say the re-introduction of weekly refuse collections or the use of wheelie bins, I believe there is a need to seriously consider a requirement for, not just a certain % of signatures, but also a representative number from across that district. This would allow for a sensible and achievable % to be applied, e.g. in a district with 50,000 people registered to vote, you can require a low % figure, say 2.5% ,so as not to make it too onerous to achieve, but you then require them to be from a representative number of locations within the district as a whole, say 33% or 50% of all wards.
Where an issue affects several wards, but not the whole district, the 5% figure could be applied to each ward affected, thereby ensuring that it was a genuine concern across all those wards and not just an issue being promoted by a localised single interest group.