But with more people connected to the TOR network doesn't that mean it has more bandwidth available? Thus more people should have no effect.
I could be wrong, still getting my head around tor.
In a way, yes, if all the new people were truly interested in TOR and configured it as relay node, it'd be great for the network.
Even
if the network can handle it I'm not sure how well hidden services handle scaling. I remember reading on the TOR mailing list that load balancing by having multiple hosts with the same private key is not possible, which means that there needs to be one super-high-bandwidth node connected to TOR to handle the service. I am not sure though.