The main limit will be a physical limit. Hugo mentioned that stacking them too high might hit the drive tray.

Also there is the tolerance level of stacking chips 4 high. I have done chips 3 high and it was a tough job. These are different memory chips though to what I was using. The ones I used didn't stack very well.

IMO unless you are running a big custom app, 32MB should be ample - even for yourself. Remember this will do much more than double the space available for the database. The original 16Mb includes the kernel, player software etc. leaving somewhere around 8Mb possibly (on a Mk2a, 4 for a Mk2) for the DB. So adding an extra 16Mb will at least triple your potential playlist/database size.