So, I was messing around with Toblo Towers and I discovered that Team
Sizes can be above five, and can go as high as you want them to.
The only problem is this: only about 12 computer players will be
active (on each team, for about 24 total) at any given time. The rest
will just stand around and pick up any blocks that land next to them.
So 12 is a good limit.
Here's a picture of a battle with 20 people.
http://img115.imageshack.us/img115/9405/greatbattlepu1.png
There were 6-8 computer players standing around doing nothing at any
given time. They didn't even move when their flag was taken.