Seems to me the biggest problem with the notion that there are "too many divisions" is rooted in the misconception that all divisions must be available at all events. Sure, when there are 20 different divisions to choose from at a single course, single day/weekend event, it seems like a lot. The solution, as others have alluded to, is limiting what's offered at a given event, not eliminating or consolidating divisions.
The future of the game, if it continues to grow as it has, is going to include fewer multi-division tournaments and more single division tournaments. Instead of one tournament offering MPO, FPO, MP40, MA1, MA2, MA3, FA1, FA2, FA3, MA40, etc, we're going to see more tournaments where the entire field is MPO or FPO or MA1 or FA2. That'll solve a lot of the perceived ills and probably a lot of the "sandbagging" BS that gets thrown around at people. Can't really play the "he would have finished in X place in MA1 if he'd played there" game if the tournament only has MA2 as an option.
The start of that is already showing in some areas with split field tournaments (tournaments in Krupicka's area, for example)...two day events that offer certain divisions on one day and other divisions on another. They allow for larger fields in each division than cramming them into one day/weekend does. Eventually, those events probably have to be split again, then split again, until eventually it is one or two divisions per event because there are enough players for each division to fill a course for the day.