Is there such a thing as “too many packets per second”

This is my opinion (just an opinion):

Your bandwidth needs are going to depend on the actual usage patterns for each user so giving you some hard fast rule is not something we'll be able to give you, but here are two approaches you can take to get an idea of how much bandwidth you'll need:

1. The simple approach is to conceptually allocate a particular slice of the available bandwidth to each user and scale by the number of users you have. I like to allocate 100Kbps per user, so for 10 - 15 users I like to have a T1. If you go with ADSL you should make sure your upload speed accomodates this 100Kbps per user allocation. The 100Kbps per user allocation is based on a user who is busy all day and who spends a considerable amount of time on the internet; browsing, uploading files, sending emails, etc.

2. The more scientific approach would be to insert a network tap (a hub works well here) between your firewall/router and your DSL modem. Then install a traffic monitoring program on a laptop (PRTG comes to mind), plug the laptop in to the hub, and set up a packet sniffing sensor. The sensor will see all traffic traversing the hub, and since the hub will be placed between your firewall/router and your DSL modem it will see all internet traffic, both inbound and outbound. Capture the data for a full work day and then base your calculations on the captured traffic. PRTG's packet sniffer sensor can show you the top talkers, top connections, and top protocols for the traffic it's captured. This should give you a very good idea of how much bandwidth you need.

What kind of routers are you using? It sounds like you're just using SOHO type routers? You might want to look at getting better routers and switches with management built in and monitorable through SNMP.

That said I'd also put in a proxy server that can log activity and block certain traffic. Proxying can help some of your speed woes, blocking can limit others.

Upgraded routers can also handle traffic shaping and limiting, as well as QoS. If you must do it on the "cheap", you could start using a Linux box (there are several turnkey solutions) to do the traffic monitoring and shaping. Install, configure, set it as the gateway for everyone's system to route through. An inexpensive box can also do the proxying work for you, and you could have options for VPN access.

We ran a SquidGuard box for awhile to filter and proxy traffic. Turned out it was also pretty good at helping track down certain malware on the network when we filtered for certain broadcasts that were scattering through the routing tables from a particular (infected) client. It was also great for getting browsing activity reports.

Just make sure any filtering or whatnot is allowed in your policies and employees are made aware of network monitoring. Sometimes it's the law, other times it's just a nice courtesy to your users to be reminded they're using company resources, not personal resources.