More is better, but once you get over £1000 or so, inflation and/or loss of interest start to make it expensive and I think the law of diminishing returns sets in.

I have heard some paranoia about a "banking holiday" as one response to the financial crisis. I've not managed to get my head around what that would look like. For example, this Chris Martenson scenario talks of access restricted to "$250 over every 48 hour period", which sounds reasonable and I don't see much need for large amounts stockpiled. Elsewhere on that site he recommends keeping a few months supply of cash on hand, which seems more extreme.