MYSQL Social Networking website - Database Design, Data Growth and Hardware
You need to increase the amount of RAM, by a LOT.  Based on the load you are expecting I'd want at least 64 Gigs in there, if not 128 or 256.  Given that most of the database will become pretty stale pretty quick I'd say that one database should be just fine.  I've got tables with billions of rows which are OLTP.  Granted they are MSSQL, not MySQL but the ideas are the same.