The only limit on the size of CF cards is the 16-bit file system - so we'd be able to go up to 4Gb if such cards existed (and if we could afford them... )
I think Nikon are just being cautious in their recommendations. There have been occasional issues with some cards and the D1 series camera - for example the original D1 can have problems with the 512Mb and 1Gb Microdrives, and some Lexar 12x cards could slow down the D1x/h "wake from sleep".
Like several others I've been using higher capacity SanDisk cards (192Mb and 256Mb) with absolutely no problems. 256Mb cards are quite a good buy at the moment: two of them are substantially cheaper than one 512Mb card.