It's not a joke, it was a limitation of the previous XBL architecture which was still in place to handle previous gen support, mainly Halo 2.
It's also not as if they could just "flip a switch" and up the limit without any work, although I don't expect a non technical mind to understand that.
Furthermore, the upgrade to your friends list was something that could be used to market their service, successful companies do not waste marketable assets.