This original poster never marked one of these answers as "correct", but this should be a useful place to start, lots of good insights: Re: Spaces vs. Groups
You may find even more with a search for "Groups versus spaces"
Thanks Roguen for your prompt response. I saw these documents and threads however no clear guidelines from Jive. We were told the following by our IT department (as we started getting requests from our group owners to move to a space architecture to meet their business needs):
- the shear volume of spaces is harmful for the platform compounded by the hierarchies
- space proliferation is architecturally bad for Jive platform and causes serious system performance issues
I hope there are some guidelines somewhere that describe these issues in more detail.