Posting Freak
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It's true, but I don't know to what extent, exactly. I remember KS wars at Hoodoos/Voodoos, though only 4 would normally spawn, with like 6 people, there were 5. Some people use this to boost spawn at LHC and stuff as well, but I dunno how well that works.
I don't think it works for drop rate, however.
Posting Freak
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For LHC castle golems map, once you get the 4th member in map, you start getting 5 spawns instead of 4. and the 5th or 6th person gets the 6th kicking in. From there, adding anymore people would increase spawning rates and not the numbers. I used to have at least 8 ppl in map every time I trained long months ago during early LHC days.
Posting Freak
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At LHC there's definitely an effect. As above, 4 spawned at a time is the base rate for 1-2 people, at Castle Golems you'll get a 5th spawn with 3, and one more per person up to 8 spawning at once when a full party (or more) is present.