I see the problem with there being 5,000 currencies. I don't see the problem with there being 3-10. Bitcoin for your savings, an altcoin for your every day purchases, an altcoin for investing with, etc... Also with proper wallet software the user wouldn't have to think twice about how to pay. Even if there were 5,000 options.
Yes, I think you're right about 3-10. As for wallet software being able to manage a high number of currencies, that's true too, but there is another problem which is every single currency created can't have value!
There is no limit to people creating currencies now with open-source cryptocurrency software.