The Magical Number Seven, Plus or Minus Two (1955) [pdf]

Here is the Wikipedia entry as a TLDR: http://en.wikipedia.org/wiki/The_Magical_Number_Seven,_Plus_...

This is a classic paper, but careful examination in the years since reveals that once you examine chunks instead of individual digits, our working memory capacity is even lower, more like around 4 (with individual variation).

(Chunking example: if you live in a town with only three area codes, you don't have to "store" 3 digits for the area code, you can sort of "chunk" them together as a whole.)