I found a thread on the Ubuntu forums, but it requires me to change the source of gnome-panel
and recompile. Is that really the only option if I want to see more than 5 bookmarks in the "Places" menu? I have a huge monitor -- it seems funny to only show two bookmarks and push the others into a separate "Bookmarks" sub-menu.

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1 Answers
Is that really the only option if I want to see more than 5 bookmarks in the "Places" menu?
Yes. I'm suffering the same issue. I've posted bugs on Launchpad (marked a dupe of this one) and Gnome's Trac. I there are multiple BrainStorm threads too.
There are two elegant solutions:
Look at the resolution when gnome-panel loads, work out some render geometry based on the current theme and set a soft limit
Just use a gconf key-value to have a user-alterable number.
But both solutions require somebody to code them, somebody to accept one patch and then somebody to repackage the new version for Ubuntu... In short, it's a change that isn't going to happen soon (unless somebody steps up and gets something pushed in as a Papercut for Maverick - might be too late even for that)
Manually patching the code to have a higher fixed limit is a pain in the bottom but it does fix the problem and (in fairness) doesn't take all day to do. Just make sure you lock the version of your gnome-panel package so updates don't wipe your changes.
I'll go and poke people upstream and see if anything can be done about this.

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Just to further Oli's comment, here is an ubuntuforums thread on how to patch gnome-menu to support more bookmarks.
– aperson Feb 04 '11 at 12:31