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Formerly a mere 50MB limit, XBLA games seemed to have had no real restrictions in size. However, with the release of the 2.1 gig Red Alert 3: Commander's Challenge, IGN brings word of a technically imposed limit of 2 gigs for XBLA games.
Since this limit seems to be caused by a limitation of the technology, it's not likely that games will be exceeding it this time.
"Scott Austin, Microsoft's director of digital games, told IGN that the XBLA system actually can't accept anything larger than 2GB. Some may be tempted to cry foul, as Microsoft already offers significantly larger downloads with its Games on Demand service. However, according to Austin, Games on Demand uses a different file structure."
Since this limit seems to be caused by a limitation of the technology, it's not likely that games will be exceeding it this time.