I know that in part, the answer is "it depends." But are hundreds manageable? Thousands? Yes, space is cheap. But what are the drawbacks to letting users create new webs sites that could result in thousands of different pages?
It's definitely an "it depends" question. I will say the numbers you are throwing out are well within (...by several orders of magnitude) the boundary guidelines provided by Microsoft:
If you're concerned about sprawl put some sort of site provisioning/de-provisioning capability in place. It could be as simple as a form that they have to fill out to request a new site tied to a workflow that optionally goes thru an approval process, creates the approved sites and then de-provisions it after some set time...basically notifying the requestor that the site is going to be de-provisioned and giving them an opportunity to extend it's life...if they don't request an extension then it goes bye-bye. Without something along those lines then I would share your concern that it will likely grow out of control.