I do see what you mean. Already, if someone throws a juicy question out there, unless you’re right there to pounce on it your answer falls so far down the page that only the most dogged readers will ever lay eyes on it. Increasing the number of users would definitely aggravate that problem. I’m much less motivated to answer a Q that already has 20+ answers.
On the other hand, if you’re the asker of the question, having a bigger pool of answerers could only be a good thing; more perspectives, broader experiences.
But new users definitely keep the interest up. I haven’t been here that long, but I already have a pretty good feel for where a lot of these folks are coming from, what pushes their buttons, where they’re strong, where they’re weak, etc. That’s great, and so many of you feel like friends, but without new faces showing up occasionally it would begin to feel a bit inbred, for want of a better term. Having some dynamic new user show up makes it all seem fresh again.
When I was an Askville regular, the admins would occasionally launch big promotions of the site and we would be awash in clueless users for weeks at a time. It was very dispiriting. One recent episode of this was what spurred my move here. The key to growth, it seems to me, is having a way to effectively integrate new arrivals so they blend painlessly into the flow, and pacing the influx so that the sight doesn’t look like Ellis Island during the Potato Famine.