I am running a Codeigniter application that uses page cache with ~350k files and take up ~26Gb of disk space in ONE folder. Is that too much?
If memory serves, CI puts each page cache in a single folder. Assuming you are a FAT32 Linux machine, and the files aren't grouped into sub-folders I imagine you may be taking a performance hit.
Referencing this; How many files can I put in a directory?
A reasonable solution could be to override the default caching library to group things into folders (perhaps based on the first N of the hash name) to improve performance.