I used to have a blackberry and I would hate it when it told me I couldn't send messages longer than 160 characters however, I could receive freaking novels from people with that same blackberry.
not sure with the stock app but I use handcent sms which is free on the market and it allows me to send "novels" and if the message gets too big it automatically converts it to an mms message, hopefully that helps.
I was under the impression that the 160 character limit is a function of the VZW network. Either way, as stated previously, Handcent will split up messages for you.