Barry Schwartz author of The Paradox of Choice: Why More Is Less recently gave a presentation at Google on The Paradox of Choice. He has lots of great statistics and examples. You can watch the video on Google Video.
Here are some notes from the video:
Effects of too much choice
Capability Vs Usability tradeoff - Capability seams more important at first but in practice usability is more important.
Via: Greg Linden