We're at just over 15,000...
...and about 90GB. With no problems. I have heard about someone with a 50,000 song library.
Backup is the real problem when your library (or Audio Vault, as I label it) gets huge. You can keep backing up the library file often so you never lose your catalog information, but backing up all the music gets hard after a certain point. I actually don't backup our library at all right now (scary). I have had poor luck with the DVD-r's that I bought, so I can't try the SuperDrive on our PowerBook yet.
As far as organization, I use playlists only when convenient, and usually temporarily. I leave keyword playlists in the source pane and label them with moods, instruments, etc. such as piano, guitar, intense, happy, hippie, dark,etc. I drag songs into the playlists I feel are appropriate and when I have time.
Every so often, I go into those playlists and paste the title of the playlist into the comments section of all the tracks that have acumulated in the playlist. The tags that build up give me great results from the search field. I can use party shuffle or smart playlists perfectly happily, but this gives me another level of indexing that can really hit the mark most of the time. I can type in "hippie guitar jams " and only get my hippie tunes that have extended instrumental sections with great guitar. Or I can modify one tag with another; "heavy guitar" gives much different results than "chill guitar," for example.
It takes a little while to tag like this, but it is a good way to make it an ongoing project. My fiance also drops songs into the playlists that she thinks are appropriate and slowly (but not that slowly) our library (err, Vault) is more and more accessible.
Holy rant!
Edit: We also have a good number of audiobooks and lecture/interview type material. If you collect audiobooks as well as music, your track count can increase quickly.
