Actually, I believe this problem stems from their login servers, which are also being upgraded. They had a queue that went a lot higher than 175 (at one point, I was in queue at 1125 or so), but that's the day all the server problems happened, they brought down the servers and when they came back up, no queue. This fixed all the in-game problems and login problems, but brought upon us the capacity problem.

So what it sounds like they are doing is threefold. Adding new worlds for new players/those who are willing to start over (or transfer over in the coming weeks), increasing/adding login server(s), hopefully giving us less of the lobby errors AND adding a large queue system, and increasing server capacities slightly, allowing for those of us already established to keep playing but no new character creation.

All in all, if all three of these things happen, I'll be a happy man.