If a sprite is not visible, or entirely off screen then it will not be sent to the GPU, but they will still effect the CPU as it tries to calculate what is visible and what isn't.
Devices will be limited by two factors, their GPU bandwidth (how many sprites can be sent to the GPU per second) and fill rate (how many pixels they can draw per second). It was a while since I tested it but my ipod touch 2nd generation managed about 300 small sprites at a reasonable frame rate (around 30fps), but a small number of large sprites might reach it's fill rate limit rather quickly (every overlapping sprite means those pixels are drawn more than once).