As the original reporter, I'd also suggest to inform the user about hitting this limit with a pointer to the workaround. I'm syncing about 40K+ files with Ubuntu One (10K+ directories) and if I forget to set this value on one of those machines, U1 of course "silently" does not sync those files that didn't get a watcher. (I say silently since it does report the issue in it's log file, but unless you are looking you will most certainly miss it).
As the original reporter, I'd also suggest to inform the user about hitting this limit with a pointer to the workaround. I'm syncing about 40K+ files with Ubuntu One (10K+ directories) and if I forget to set this value on one of those machines, U1 of course "silently" does not sync those files that didn't get a watcher. (I say silently since it does report the issue in it's log file, but unless you are looking you will most certainly miss it).