I'm assuming your villagers have parenting skills:
Villagers will only make villager babies on their own and on a regular basis, if their parenting skills are at least at the adept level.
If you have been dragging villagers on top of each other: Sometimes it takes several tries before the population will go up (The greatest number of times I had to try was twelve).
You may need to complete more puzzles (The FAQ for this game is very thorough) or have a higher collection of food (villagers won't make lots of babies if they're hungry or will be soon). A key puzzle to complete would be the Sustainable Fishing puzzle. After I completed this puzzle my population went up substantially (37 to 65 overnight with the thanks of a male villager whose skills were set to parenting).
If you have used any cheats or codes, sometimes a game will not function the way it is supposed to while the cheats or codes are active, possibly in your case affecting your ability to have a higher population.
If none of these situations apply to you, you may need to have the game repaired or your PC checked for any bugs/defects/viruses, etc.
Hey, thanks for the reply. When I drag two villagers on top of each other, I get the max population pop up message. I've completed all the puzzles, and am currently sitting on 100K food. It's very odd.
I will say that I'm playing the iPhone version. Maybe that's just a difference between the two versions (though everything else seems to be the same).
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I am on the iPhone version and also just hit a max of 40. I'm guessing it has something to do with performance. If they let you go up to 90, maybe it would become too sluggish to be playable on the iPhone hardware.
To be honest, though, I'm having trouble keeping an eye on everyone at 40, so I would only get more frustrated at 90, probably.