Too many categories — is a worse problem than “too-many-tags”. In many case (like assigning a category) I need to scroll a long list of categories.
Q: how many tags would be too many in a big blog?
A: 300. Too many would slow down auto-suggestion when I am in a hurry
A: biggest problem is when two tags have overlapping meanings, so 8 out of 10 under Tag1 also has Tag2. For tags, overlap is a bigger problem than proliferation, so lots of fuxi* or upto* tags are not so bad.