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The only issue I've had with having lots of people together is that the conversation sometimes gets disjointed. Since people type, think and react at different speeds, often the more people involved the more confusing things will get. People will respond to statements or emotes/actions, etc. too late, things will have already moved ahead - or too many people will talk at the same time...
Sorta like real life -- get a comfortable dinner party of 5-10 people and things might run smoothly - when you start going over 10, it's time to break into little groups and chat quietly.
Of course, if most people are watching and not talking then it's much easier to have a lot of people witness some grand event for example.
It most certainly depends on the situation, but I would say that 5-10 is quite manageable, although it might be difficult for some (slower typers or slower RPers) to get properly into the groove.
Pleos.
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