Depending on the file system your hard drive uses, there may be a limit to the number of files you can have in a single folder. For FAT16 file systems, the limit is 512 files in a single folder. For FAT32 file systems, the limit is 65,517 files in a single folder. If you are using the NTFS file system, you do not need to worry about limits. There is a limit (well over 4 billion) but it is so large, you're never going to reach it.
However, you can resolve file limits by using subfolders in your Downloads folder. To see what you can subfolder and a further guide to organizing your custom content, see: Game Help:Organizing Custom Content.
Sims 2 does not have a physical limit to the amount of custom content you can use. If it does, that number is higher than anyone has ever found - and you will run out of patience with long load times way before you ever reach it.