This depends...
Agreed.
One school of thought, to which I subscribe, has Ad Groups as your chance to create really targeted ads, that attract really qualified potential customers.
In this scenario, an Ad Group = a collection of keywords about one thing, and an Ad, also about that same thing.
So how many ad groups you need depends on how many products or services you have to offer. Or at the very least, how many distinct 'types' of products or services you have to offer.
Just my $0.02. ;)
AWA
Champaign: Widgets
Adgroup: Fuzzy Widgets
Adgroup: Sleek Widgets
Adgroup: Underwater Widgets
Champain: Thingamabobs
Adgroup: Home Thingamabobs
Adgroup: Office Thingamabobs
Adgroup: Sports Thingamabobs
Campaigns for different sites.
Ad Groups can be sorted by both product and keyword as follows:
Widget1 keyword1 keyword2
Widget1 keyword3 keyword4
Widget1 keyword1 keyword4
Widget2 keyword1 keyword2
Widget2 keyword3 keyword4
Widget2 keyword1 keyword4
That way they are both sorted by product and you can group related keywords. Voila!
Jon