I applied to 8 this time around. I was originally going to apply to 7, but the last one I was on the fence about getting rid of and I was like, "What the heck, I have the money, might as well try." I'm in a similar situation as I have a 3.2 cGPA. It's all about where and how you apply. I picked schools off of the following criteria: 1) Prereqs (I don't have o-chem II) which dropped options from 30 to 13; 2) ease of working with them (dropped a school simply cause I didn't like their website set up and couldn't find any information on them on their own website) which dropped it down to 12; 3) How they weighed different aspects of the application (dropped two schools right there since they valued cGPA rather highly) which dropped down to 10; 4) How many OOS people they take, which dropped out the last two schools to make 8. I'm not picky about where I'll be living as that doesn't really matter to me and the 8 schools range in tuition from 28k (IS) to 50K (OOS), so I'll base my admissions choice on what is cheapest at that point (if I get admitted). To me at this point, I can't really be choosy when I might not apply again next year. I also only applied to schools I'd be willing to go to if accepted. Don't just apply somewhere to get in. Apply somewhere you'd go if you got in. I noticed a lot of people declined their only acceptance because they had second thoughts about location/program/money/etc. That's totally their choice, but that's something better to realize sooner rather than later (which doesn't always happen, I know).
Your chances don't go down in the sense that schools will dock you points for it. It goes down because the average person who applies to a ton of schools are going with the "spray and pray" method (as it's called in videogames) where you have less than stellar stats and so you go big to maximize chances of landing a hit.
