There is a very nice discussion of this in The Language Instinct. My office mates and I sometimes mutter this at each other when the discussion has gotten overly abstract :)

Another one I like from there is "Bulldogs bulldogs bulldogs fight fight fight!" The yale cheer (and also a grammatical sentence). Theoretically this can be embedded as many times as you want and still be grammatical, but the human grammar processor is typically incapable of more than three levels of embedding.