if it's designed to use 256 instances, then ok.
If you can, make it configurable. Some cheaper end sound cards will lie about capabilities and simply screw up, if you try to play more than 16 sounds simultaneously (I'm looking at you, RealTek!).
With today's cards, 32 - 64 sounds should be fine, but still try to keep the number reasonable.
Also think about restarting sounds rather than playing them a second time, in case some common/short sound plays multiple times.
For example, some coin collection sound shouldn't start playing more than once every few game frames in parallel, because otherwise these would add up and get far loud than intended.