diversification - too little or too much?

When it comes to strictly the stock market, how much should one diversify? Should we not hold shares all in the same sector? Should we be wary of the iron ore market because of the risk of decelleration in Asian growth? Do you perhaps have a threshold % for how much one stock should take up in your portfolio?

Interested in your thoughts, particuarly if you have a rule of thumb for how much one stock should weigh in your overall portfolio.

For mine, I normally have about 5-7 stocks in my portfolio at any one time, with individual weightings from 5%-30% depending on my confidence in the company.