This is just a revamp of a function I wrote a while back to add the ability to limit the number of words displayed when you call the excerpt or content. As it stands, the max number of words for the excerpt is 55. There is a new function with WP 2.9 to increase this number. Check out Quick & Easy Excerpt Mods Coming in WordPress 2.9 for more on that subject.

Add the following code to your functions.php file.

function excerpt($limit) {
  $excerpt = explode(' ', get_the_excerpt(), $limit);
  if (count($excerpt)>=$limit) {
    array_pop($excerpt);
    $excerpt = implode(" ",$excerpt).'...';
  } else {
    $excerpt = implode(" ",$excerpt);
  }	
  $excerpt = preg_replace('`\[[^\]]*\]`','',$excerpt);
  return $excerpt;
}

function content($limit) {
  $content = explode(' ', get_the_content(), $limit);
  if (count($content)>=$limit) {
    array_pop($content);
    $content = implode(" ",$content).'...';
  } else {
    $content = implode(" ",$content);
  }	
  $content = preg_replace('/\[.+\]/','', $content);
  $content = apply_filters('the_content', $content); 
  $content = str_replace(']]>', ']]>', $content);
  return $content;
}

Now, instead of using the_content() or the_excerpt in your loop, use excerpt($limit) or content($limit).

If you want to limit your excerpt to 25 words the code would look like this:

<?php echo excerpt(25); ?>

I also created a plugin for this that you can download at http://wordpress.org/extend/plugins/content-and-excerpt-word-limit/.