I keep close to my entire library on my Kobo. I have close to 600 books (not incl the 100 pre-loaded) and I have no problems with it being to slow. The initial start up can take a few minutes but that doesnt really worry me.
I also dont mind searching thru the library for what to read next, I sometimes fing things I've forgotten I have!
But I rename alot of my files using Calibre so for series I have the titles as (for eg) Tony Hill 6- The Fever of the Bone so all the series are together and relatively easy to find using the 'by Author' search.