Too big for what? Without some qualification, the question doesn't make sense. Is it too big for it to be worthwhile to YC itself? YC obviously doesn't think so. Is too big for startups to feel like they are getting a good deal? You'd have to poll the startups themselves and find out. Is it too big for investors? No, investors like having a big funnel.

As an investor, having 200 startups to comb through is similar to being an employer with 200 resumes to choose from. 200 resumes is better than 100. It's your job to filter and choose the ones you're interested in.