John Hight, Director of Sony Computer Entertainment Santa Monica, has told Firing Squad in an interview what the size of PS3 downloadable games will be.
Hight stated in the interview, "We've arbitrarily set a limit of 500MB to keep download times reasonable. Since we've got plenty of HD space we can accommodate even bigger games and a lot of them."

This will surely please developers as games are limited to only 50MB on the "other" online gaming network.

Sony haven't officially stated what the upper limits of the downloads will be, but we're betting it will pretty high. Afterall, Sony have previously announced that they will be putting downloadable Playstation (PSONE) games in its Online Store.
Some PSONE games originally came on multiple disks, so this means the size of the downloads could run into hundreds and hundreds of MBs, possibly even hitting the 1GB+ mark.

We'll keep you updated if, and when, Sony release any details of the possible maximum limit for downloads.