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Another way of putting it - if they are limiting your approach then you have too few. If you can't make up your mind which context you should put something in because of ambiguity, then you probably have too many.

Personally, I have a lot of contexts but some are very rarely used (e.g. LHR for Heathrow - I don't go there more than 3 times a year, but it is useful to have a context for when I do). For that matter, many of them are locations (so they are nested under that heading) or software (ditto). There are lots of locations because of the iPhone app's ability to know where you are, but if I didn't have an iPhone, I doubt I would have so many. There's lots of software because I use a number of different tools for my work.