Maybe? I have been basically living in gmail since the start of the beta and I have < 500 contacts and I have never deleted a contact and use my email very heavily.
I'm sure in 5+ years I may get to this point, but in a year or 2 or 5, who says what this arbitrary upper limit is. Google seems to increase capacity on just about everything else, I dont see why this would be different.
I just checked and I have 2500 contacts just my virtue of using GMail for mailing list. I probably care about less than 100 of those.
There's things like contacts for every Debian and CPAN bug I've ever filed, contacts for people who change their E-Mail address every day due to using some wildcard catch + script to generate them etc.
I'm sure in 5+ years I may get to this point, but in a year or 2 or 5, who says what this arbitrary upper limit is. Google seems to increase capacity on just about everything else, I dont see why this would be different.