The current cap on your Xbox Live friends list is—and always has been—set to 100, a paltry figure for some Xbox Live social butterflies. The reason that number hasn't budged in four years is due to one game.
According to a report from G4, that game is Halo 2, built on the old Xbox Live architecture and a game that Microsoft still supports. Wisely supports, that is, as the original Xbox game still regularly sits atop the weekly "Original Xbox Top Live Titles." But it's the title that's hampering your ability to enjoy a wider circle of e-friends.
G4 cites a "high-level Microsoft source" in discussing Halo 2's effect on the bigger Xbox Live picture, which, while unconfirmed officially, makes a hell of a lot of sense.
Not a problem for me, as I only have two Xbox Live friends: Crecente and my mum. She always lets me win.