[macrael]

How many transactions end up in a block? How big are blocks?

[maaku]

As many as will fit, and maximum 1MB.

[apo]

There's some controversy around what to do about this problem. See, for example:

http://keepbitcoinfree.org/

[perone]

Recently, a new patch is going to enter in the bitcoin-qt client that increases the default size of the block for miners from 50k to 300k to accomodate higher transaction volume.