Seven plus or minus two refers to working memory. When you encounter say a navigation menu with 10+ unstructured items, it becomes impossible to consider all the options at once.
But when you look at a menu, you know what you're looking for so it's a matter of identifying one thing. Aside from convenience I don't think the length of a menu matters much.
The point is when you don't know what you are looking for exactly. The Abobe products are a good example of this. I don't use Photoshop often so I forget where stuff is. Having a lot of menus and each menu having a large number of options makes it difficult for a novice user (like me) to find the resize image dialog, for example. To be fair, Photoshop is designed for experts and expert users will learn an interface no matter how crappy it is so it isn't a big deal in this case. But the endless options and menus do make it harder for novice users.
If the menus and options were grouped in way that is in line with human psychology, it would be easier for novice users to find that one option. I know the Office ribbon gets flack on HN but Miller's Law is one of the big reasons for the Office ribbon and how it is designed which makes it a lot easier for novice and intermediate users to find that one option in Office.