Is there any limit (OS or best practice) on the maximum number of files to have in one single folder?

I seem to recall that there was a limit, or at least a point at which it could become problematic.

I am running Windows Server 2003 as our primary file store on a 12-user LAN. It has multiple folders, but one in particular has grown to about 8,000 files. Each file is very small (1 - 5KB), but there are a lot of them.

The files are stored on the server in a shared folder, that is hosted in a DFS tree, and users access this DFS tree from a mapped letter on their XP machines on the LAN.