I'm at about 5400 on a nexus 4 running lollipop. I get a slight delay when the town first loads to get everything, but the animations themselves are not laggy. My ipod 4th gen is much laggier with a way smaller game.
There was a time in the summer when people with bigger towns were super laggy on my neighbor list, or their towns wouldn't load or kick me out of the game. It seems like they've fixed whatever was causing that issue.
According to the extensive reading I've done on this topic, the absolute limit is 7600 (I think I found this on an old thread first on tstotopix, and then had it confirmed at another site (I can't remember)).
I've also heard of a couple of people who have lost their town who got close or maxed out their decorations. But there are a lot of people with complicated decoration heavy towns who have been playing a long time.
