<p>In one of the stackoverflow podcasts (#18 I think) Jeff and Joel were talking about multi vs single tenant databases. Joel mentioned that "FogBugz on Demand" used a database per customer architecture and I was wondering if there is a point beyond which you'll need to have multiple database servers to distribute the load?</p>

Technically the limit of databases per instance in SQL Server is 32,767, but I doubt that you could use a SQL Server instance that has more than 2,000 databases, at that point the server would probably be not responsive.
You may be able to have close to 30,000 databases if they were all auto-closed and not being used. you can find more information about capacity limits here:
Maximum Capacity Specifications for SQL Server