Chunking: more chunks or more items? I'm working on a game that's designed to exercise the player's short-term memory. In the core game loop, I present the user with a random set of items (anywhere from 3 to 30), and after they click start, ask them to regurgitate that set of items. 

The items themselves are simple but arbitrary / semantically meaningless, eg. four colours (red/blue/green/yellow), or four arrows (up/down/left/right).

As I increase the game difficulty, what I want to know is: is it more difficult for humans to memorize more groups (eg. five groups of two items each), or smaller groups with more items (eg. two groups of five items each)?

I recall learning that short-term memory is generally seven items (plus or minus two, eg. 5-9 items) but I'm not sure how grouping/chunking affects that.
I think you're misunderstanding the concept of chunking. If the items are arbitrary with no connection to each other, chunking will do you no good since grouping them is meaningless and thus you're still memorizing the individual items in the groups instead of the groups themselves. This paper from Brady et al. goes into depth about the limits of working memory, I also recommend looking up the references mentioned. Here is a relevant passage about the definition of chunking from that paper:


  Cowan (2001) defined a chunk as a group of
  items where the intrachunk associations are greater than the interchunk
  associations. In other words, in the sequence FBICIA the letters
  F, B, and I are highly associated with each other and the letters C,
  I, and A are highly associated with each other, but the letters have
  fewer associations across the chunk boundaries. Thus, observers
  are able to recall the sequence using the chunks FBI and CIA,
  effectively taking up only two of the four chunks that people are
  able to store in memory (Cowan, 2001; Cowan, Chen, &amp; Rouder,
  2004). By comparison, when the letters are random, say HSGABJ,
  they are more difficult to remember, since it is more difficult to
  chunk them into coherent, associated units.