If you are talking about singarounds at festivals I think it depends on how many participants you get at the venue. For example the Theatre Bar at Sidmouth is usually packed for the lunchtime singaround and people are strictly limited to one song per round unless they are part of a duet and then it is two. Even then it can take over an hour to go round the room once. If you don't have many participants then 2/3 songs per set may be OK but you need to judge it so that people are not having to wait an excessive amount of time for their go.
On a folk club note our club (Dunton Bassett, Leics) operates a policy of a general session for the first hour and then a formal singaround for the rest of the evening.