You can get rid of the global variable by testing the actual settings instead:

    function! NumberToggle()
        if (!&number && !&relativenumber)
            set number
            set norelativenumber
        elseif (&number && !&relativenumber)
            set relativenumber
        else
            set nonumber
            set norelativenumber
        endif
        set foldcolumn=0
    endfunc