Yah I do play with my friends all the times. And, to a point, it is more fun with more players. However when the screens get so small you can barely play...well then it's pretty useless. Maybe...maybe, if it supported 8 it would be ok on extremely large tvs or projectors, but having an odd number would just mess up the size of one of the screens. 4 players for me is more than enough. If I'm planning on playing with more I have a friend bring over an xbox and I'll get another tv hooked up for system link.
I can actually see about 6 people on the Wii still being fun...Nintendo has a way of making something work well when it wouldn't seem like it. For example on double dash with 8 people...4 karts, 2 people per kart. Might work out then. Same size screen as usual.
This is where HDTV becomes useful
With 1080p and 6 players, each player gets 640 x 540 resolution. That's more resolution than the Wii can output total.
(I don't know how 7 players will be laid out, each player will get either 360 x 540 or more likely 640 x 320).
However, because any good HDTV is progressive, the Wii WILL still look a lot better on an HDTV. I played Mario Kart 64 on a 720p HDTV, and while it was funny how blocky everything looked, it was much easier to play on than an interlaced SDTV.
Oh man, don't get me started on how much I hate Oblivion