I think the key here is the Goldilocks principle: too little or no choice is bad, but so is too much choice. The key (from a marketing perspective) is finding just the right amount of choice that does not overwhelm, but gives a range of varying options. Other commenters have mentioned finding a sweet spot - Apple's x/y axis that leads to four product categories; trimming the number of potato chip options on the rack from 12 to 5 and seeing sales jump.