Yeah, this is an old argument. I’m not going to answer the question. I have my opinion. But, I did see the question come up again in the SL Forum (reference). I thought one of the better answers was quite creative and insightful and funny.
From Rhonda Huntress in answer to whether or not SL is a game:
I have found that underneath it is a game.
It is an inventory management game where you sort and categorize items with increasing complexity while creators strive to develop new items that defy conventional categories. Soft caps are there to force you to weed out duplicate and superfluous items or risk crashing, being turned into a cloud or worse yet, loosing large portions of your inventory. Everyone has to play the game to some extent and the rest of the world is there to entice you to add more and more items to your inventory.
The soft caps (limits) is also an expression of an idea I hadn’t thought of before. But, it well describes how inventory works. As an example, the number of items placed in a single inventory folder can cause problems when more than 5,000 items. But, the actual number where problems start seems to be dependent on the computer and connection. So, to accommodate the variety of computers and connections there is no hard limit enforced by the servers.