Great news over all. I support the XMPP move, it opens up other options, that I too would like to see you consider, perhaps you already are.
As for the increase in groups, my initial response was "Yay!" -- but then came the "but" and "rollback" comment. I would agree with Bryon Ruxton, perhaps consider increasing by smaller increments, testing out the system first, because once you move to 40 groups, and then per chance find there are significant issues, then telling people they need to dump 15 groups will create a huge outcry, and bitterness to many. I think it would better to avoid that, and give them smaller gifts instead. Perhaps your decision to go with 40 groups, is so you can test it at it's peak, I would definitely stress to the community, that the 40 groups could be very temporary, and is only a test when and if you do implement it. Think "baby steps" perhaps in this situation...
More groups are definitely needed no doubt about it, especially for builders who are required to belong to each group we build for, and for business owners who place shops on multiple sims. It's clearly been unfair to content creators/builders, the people who help make SL the growing community that it is. Not being able to enjoy having multiple groups that we "want" to participate in, but are forced to, reduces the enjoyment factor for those who are hard working contributors.
Group Chat Lag: Ahh... this is HUGE. My group is hit by lag every hour of the day, it hurts the community participation due to it. As a large group owner, it's extremely troublesome to say the least, when my group never even opens for me, and worse, when I can't even open or get into group chat to moderate, or announce things. Timely response in a group is also extremely important to me, I seriously am looking forward to this improvement.
Dashboard control for group and land owners: This would be huge to so many, please consider implementing this feature.
Display Names: I love and hate this feature coming. I love it because I like the idea of using my nick name "Sen" (hate my first name), yet I feel uneasy about it because of the issues it may cause. Jury is still out on this one.
Suggestions: I would like to suggest for the sake of reducing more group needs, that you consider adding more roles to groups.. Also adding capabilities such as sending notices, or IMs to ONLY certain roles. This would certainly cut down on the need for more groups significantly across the grid. I don't know if this is easily done, but would be a welcome improvement.
Let me end by saying congratulations to you for the wonderful improvements that you are working so hard on thus far, and good luck on the challenges that still lie ahead. We know that you too see the problems that exist, we know you want to fix them too, and that you must have reasons behind your madness for what gets fixed first.. eh hemm.... We'll do our best to be patient, just sit back, enjoy the bumpy ride, and hope for the best, giving you credit for what you have achieved here overall, it's certainly due you.