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The maximum number of classes for the Classified Renderer is 32. This article shows how to increase this limit.
You can increase the limit of 32 classes can by typing the desired number of classes in the Classes dropdown list on the Classification dialog box.
To change the number of classes:
1. Click 'Classify' to open the 'Classification' dialog box.
2. Change the number of classes in the 'Classes' drop-down list.
The maximum limit of classes in ArcGIS 8.1 is 256.
For raster layers, the value in the Classes dropdown list on the Symbology tab is not modified with the correct number of classes entered on the Classification dialog box even though the legend is updated. This is a known issue with ArcGIS 8.1.