WordPress can handle large databases and high traffic quite well. I think one good example of this was seeing some WordPress sites holdup to high traffic when the recent iPhone announcement happened.
This really comes down to how well you code your theme/plugins, how you manage caching and your server configuration. WordPress will not be a bottleneck for you so long as you don’t screw it up with bad code.
For a social plugin, check you BuddyPress, which is the de facto standard for such sites running on WordPress.