Lexur - 6:40 am on Nov 22, 2008 (gmt 0) And, of course, it's just a theory. Only Google knows. :)
1. How does Google handle such a sudden increase in pages from an established site?
Badly. Very badly. You should start adding new products in a reasonable lapse of time, lets say ten every day.
I need to modify my homepage to accommodate the changes - how sensitive is Google to homepage changes?
I don't think Google cares about "homepage change" but about title, keywords in the text, number of links and so on. If you suddenly increases the number of sections in your site, and then the number of links, the PageRank flux will change for sure, and then the SERPs.
And, of course, it's just a theory. Only Google knows. :)