For now, it's 100. The 100 friend limit was something that was carried over from the original Xbox Live, and that they couldn't change while they were still supporting that.

As of today, they are no longer supporting original xbox live servers. That means no more Halo 1 or 2, or any other Live capable original xbox titles. At least multiplayer wise.

The original Xbox Live wasn't just holding back the friends list, but Microsoft won't say what other things were hindered by it. However, there should be an update sometime in the near future that adds functionality they couldn't before, and increases the friend list limit or gets rid of it. They haven't been specific at all about this really.

Edit: seems there was already a thread about this posted the day before this one was, reposting this in there.