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To answer Alex's point - yes they do follow links and look at the whole page - However - that said, there are numerous benefits to breaking down the pages to a point where you have less links per page - Googles' recommendation has always been 100 links per page - Ive never seen it actually hurt anyone to have more.
As far as the real benefits of doing the seperate pages - first is the page rank distribution - more pages will naturally get less page rank from the "main" pages that you are being linked to from outside, but that page rank will naturally increase itself because of the extra pages you have linking back (I assume) to your index page so that there is no overall loss.
Spidering will take a little longer with all of the pages, but then, you can definitely change the text content of each of the page2,3 etc to rank for more terms.
As far as rotating the content, it is a definite boost as Google is very fond of "updated" pages
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