The only limit to number  of sheets  in a workbook  is available memory,
according to:

office.microsoft.com/.../HP100738491033.aspx

Earlier versions of EXCEL may have had different limitiations. You should
be able to find the limitations of your version of EXCEL in the help file it
has. Just look for "limits".

The 255 limit you found is probably just an arbitrary limit they put  on a
dialog for creating new workbooks. Since it is a drop-down box, they did
have to put a limit there. Why they have it as high as 255, I don't know.
I would think 16 would be more than enough for 99.9999% of users. In fact,
I made my default 1 -- if I want to add additional worksheets, I can. It's
not like it requires a redesign of the workbook from scratch.