According to a post on the Facebook page Official Xbox Germany, with the next dashboard update for Xbox 360 you can have up to 1000 friends on Xbox Live. The old limit of "only" 100 contacts, would in fact be increased tenfold. Translated, the post (there is now removed) reads something like this:

"Increase the limit of 100 friends on Xbox Live is a desire that many people for some time. With the update, you can have up to 1000 friends on the list. How many friends do you have? Not enough? Then look for them in the "Friends" "

The dashboard update will arrive on 4 November. Expect confirmation or denial for this new expanded friends list.

Update: The news was officially denied by Major Nelson.