Limiting the amount of posts retrieved by the loop

The code you posted does not query for any content at all. To do that, use the WP_Query object. Please do not use query_posts, especially for secondary Loops. From the Codex:

// The Query
$the_query = new WP_Query( $args );

// The Loop
while ( $the_query->have_posts() ) :
    $the_query->the_post();
    echo '<li>' . get_the_title() . '</li>';
endwhile;

All you need to do is provide $args. In your case array('posts_per_page'=>3)

$args = array('posts_per_page' => 3); // or however many you want

// The Query
$the_query = new WP_Query( $args );

// The Loop
while ( $the_query->have_posts() ) :
    $the_query->the_post();
    echo '<li>' . get_the_title() . '</li>';
endwhile;