This command sets how many folders each user may have. The value must be at least three, to accommodate the three default folders. If it is three, then users cannot make their own folders.
/as services set folder limit 5
How many folders users should be allowed would depend on how you want your users to use MemoServ. If you intend them to just use memos for temporary communications, you probably want a low memo folder limit. If you want users to use memos for communications they will store and reference later, then you probably want a larger memo folder limit.