When dealing with quantities of this amount, you probably want to know the behaviors of your file system.

To continue on kennethk's post, you should also make a decision based on your type of file system. 10K files can be too many files for a standard UFS file system to stand up to (because of needing to read more blocks for a directory than can be handled by a single read). One email processing system uses a directory size of 23 (IIRC) to increase its performance because of this. In the case of 1 million files, you would need to go 4 directories deep to handle 1,000,000 files in a small number of reads.

See Re: Efficient processing of large directory and Unix_File_System for more information.