We haven't set the party maximum just yet. The sweet spot, just from playing in the office, is 1-4 players. There's no technological reason why we can't increase that, but once you get up to, like, eight players, it gets ridiculously crowded if you're at all in the same area.
Thankfully, players aren't locked to the same area as "it is possible to have a group of four in the late game and then another group of four in the early game in, technically, the same game session." There's an internal debate raging, but the maximum player count will "probably be between four and eight."
Here's a trailer showing off Torchlight II's co-op:
BOOM video 6087
Torchlight II is due out later this year. Meanwhile, Torchlight will be released on Xbox Live Arcade soon!