I do internet marketing for a small company, but the tech stuff and SEO are handled by other people. I recently became aware of a feature in Google webmaster tools that allows you to see where broken URLs are coming from. I looked through our file and found some links coming from websites that weren't complete. On two forums a person linked to our product name but didn't put the full url, so instead of mycompany.com/product-name they just linked mycompany.com/product. This url opens up a generic page to our site instead of going directly to the product.
I asked if we could 301 redirect this url to the product page but our IT guy said that our redirect file was already too big. How can a huge redirect file be bad for your website?
I'd estimate that you could fit at least 400 individual redirects within a 25KB file - of course in most instances many redirects can be consolidated to a single line through the use of pattern matching. And of course, your server my well be able to cope with much larger files than that.
The only possible downside would be degraded performance.