“One of the most misleading arguments used in favour of reducing visual complexity is the rule of 7 +/- 2. The rule states that the human brain can’t handle more than 7 +/- 2 items at a time. […]
The trouble with this rule is that the psychologist George Miller who formulated it was studying the limitations of short-term memory – not limitations of what people can perceive visually at a time. Humans can only retain 7 +/- 2 items in the immediate memory, but have no problem in dealing with great amounts of information in the field of vision. As long as you have information present for continuous reference, immediate memory plays no significant role in your perception.
The rule of 7 +/- 2 can be quite harmful when applied to navigation. On the surface it might seem reasonable that reducing the number of menu items of each web page will make it easier for people to navigate. But this is not true. Reducing the number of menu items will make the site hierarchy deeper and thereby increase structural complexity. Research has shown that users generally find information faster in broad and shallow menu architectures than narrow and deep ones. Roughly 16 top level links leading into 2-3 subsequent menus seems to be the most efficient and least error prone.”
Read on: Balancing visual and structural complexity in interaction design