Future of home folders

Middle school, 500 users, fast new Intel imacs, all students log on to a server and save in their home folder.

Server is 2x3 Ghz Quad Core INtel Xeon with 16 GB ram. Home folders in 2 different drive bays.

I am told Apple does not recommend the home folder environment like they used to. We use HyperStudio and MS Office for most projects. When 30 students log in, works great, but if 90 students hit the server within a 5 minute period is takes way too long to get resources to desktops. (Especially MS Office)

We are thinking of giving students Google accounts and using Google docs (Drive) next year. Our computers would be logged into local accounts and only mount the server (not home folder) if they needed to save something for retrieval later.

Does Mountain Lion server resolve some of these issues or should we just move on to a more cloud base environment?