Since you asked, I googled this phrase "linux kernel process number limit" and took a couple of the first hits (the list is different now, it would be the 1st and 3rd hits, I think).
Yes, 32768 seems the max for 32-bit kernels. You _could_ change it in the kernel source, but _I_ wouldn't try it since the setting is the single highest bit in a 32-bit word. I'd view that as probably related to word size and think that I'd likely break hard to find stuff somewhere else in the kernel.
YMMV, of course, and more searching might turn up a different answer.
EDIT: I found the info for the second (32-bit limit) part by googling: "linux pid_max 32768 invalid argument"
Edit2: Note that if increasing the number of threads per process instead of the number of processes itself would help then this will tell you how to do it (NB: I haven't): http://stackoverflow.com/questions/3.../344292#344292