Hi,
the epub consists or consisted back then of several html-files (one for each chapter for example), but I don't recall the maximum size of one of these files.
I'm using calibre to convert into epub. In this program you find a setting in (I don't know the original english wording, because I'm using the german program):__settings - conversion - output - epub output - check: split files larger than 260kb__, so maybe you can research the limitations from here. And you can feed calibre with an "modern" epub to create a new epub with those file settings.
If you should by a new one: I'm sure you will get different answers to that question. I'm quite happy with my old readers. I'm still using the oldest one (PRS-505, love it!) alternately with the little less older ones
and have changed all the batteries apart from the T3.
And, I like the PRS+ firmware of the older sony readers much more than the android of the T3.