How can heat loss to the surroundings be minimised?

You might wish to use a second polystyrene cup inside the first one and also a lid, in order to minimise any heat transfer to the surroundings.

Can we use data loggers?

Yes, this activity can be adapted to use data loggers if they're available. This would allow the graph to be plotted in real time.

Should we try this activity with a different acid, eg sulfuric acid?

Yes, if you think this is appropriate for your group of students. Encourage them to think about what may happen in the example of sulfuric acid, a diprotic acid with twice as many protons, assuming you will use the same concentration. The point of neutralisation will occur earlier. 

Why use such high concentrations of acid and alkali?

High concentrations are used despite the additional hazard so that a large enough temperature rise is recorded. More dilute solutions would give only a small temperature rise and the neutralisation point would be less accurate.