The title loss is probably because of gavelkind succession, yeah. You'll probably want to hold of on forming the Kingdom of Sicily until you have primogeniture succession enacted, since I believe you'll use the Byzantine's Crown Laws until then (you need high crown authority to change succession to primogeniture).
I disagree strongly. The first son will inherit the highest title, then the second son will inherit the next highest title, then the third son will inherit the next highest, then the first son will inherit the next highest (as far as I know, only the first three eligible heirs inherit under Gravekind, everyone else is screwed), then the second son, etc.
What this means is that if you have two duke titles and no king titles, then your first and second sons will rule two different and completely automonous duchies. Which means your holdings will more or less be divided in half upon death. However, if you have a king title, then your first son will be king and your second son will be a duke under your first son, keeping everything you worked for under your first son who has the king title and control over your second son.
If you want to be a dick and consolidate all family titles in one person, you can implement seniority, which causes the oldest male heir in your dynasty to inherit everything whenever any member of your dynasty dies. But again, this is a dick move, which causes everyone to hate you a bit because you're being a dick.
I'd strongly advise against killing off second and third sons even with Gravekind. Even though your next ruler will have less stuff if they have surviving brothers, the risk of having no males to inherit outweighs this loss. While you might have a daughter inherit, you'll usually want to marry them off to other rulers that can help you out, meaning their children aren't of your dynasty and leading to the pesky "kill off existing husband and children" if they happen to inherit, which only works if they are young enough to still have more children.
Besides, relatives are more loyal vassals than non-relatives. And if their schemes work, then somebody in your dynasty still inherits (even if you and your sons are dead, you play as them).