netmeg - 3:15 pm on Jul 22, 2010 (gmt 0)
I go the other way, actually, and I do use a lot of ad groups. One of my AdWords clients has over 2000 products and I still don't have them all in yet. But you have to do some research - not *all* products are heavily searched in Google anyway. Concentrate on the most likely ones first, and you'll see what works and what doesn't. You might be able to group some of the other ones together.
Organization is *everything* in AdWords, but what works for one set of circumstances isn't necessarily what works across the board.