Use pages for pages and posts for posts. Both post types are specialized for their use case. They use different permalink settings and list tables.
The number of pages is not limited. I have seen site with more than 50.000 pages running smooth.
In earlier days, the permalink parsing for pages was slow under some circumstances, but that has been solved long ago (by @Otto, if I remember that correctly).
You can use categories, tags or custom taxonomies on pages too.
A simple example demonstrating how to let pages act more like posts:
add_action( 'wp_loaded', 't5_page_enhancements' );
/**
* Excerpts and tags for post type 'page'.
*
* @wp-hook wp_loaded
* @return void
*/
function t5_page_enhancements()
{
add_post_type_support( 'page', 'excerpt' );
register_taxonomy_for_object_type('post_tag', 'page');
add_filter( 'pre_get_posts', 't5_add_pages_to_tax_query' );
}
/**
* Let WP search for post type 'page' on tag archives.
*
* @wp-hook pre_get_posts
* @param object $query
* @return object
*/
function t5_add_pages_to_tax_query( $query )
{
if ( ! is_main_query() or ! is_tag() )
return $query;
$query->set( 'post_type', array ( 'page', 'post' ) );
return $query;
}