There shouldn't be a limit on how many MP3G sets can be in the folder. With KMA files, some users have 30,000 songs.
Is there one particular file pair (.mp3+.cdg) that may have a bad compression on it? That is the only reason I can think of that would cause Hoster to crash. MAX compression available from some products has caused us no end of grief!
Version 3.001 will release today. We hope to have the download links updated for existing customers, but our web master must do that for us. It has more error traps for MP3G and ZIP files that can be "bad".