I recommend using lists. I'm not sure if there's a limit on the number of people you can add to a list but I haven't hit one yet. I typically follow only friends and people who I find particularly interesting but I put lots of other people on lists. The other benefit of twitter lists is you can divide accounts by categories. For instance I have a list called hackers that is only programmers, and a list that is only designers, etc. I find lists can give useful context to twitter and help pull some signal out of the noise.