They definitely can. Every time a texture group fills up a texture page, a new one is generated. You can see this in action if you go into Game Options -> Windows -> Graphics and click the Preview button. In a few seconds (or minutes) the folder will open and you will see the madness. So if you're doing large sprites (which it sounds like you are) you definitely want to have them in their own texture group and possibly break it up into multiple texture groups if it's really gigantic.