I've seen some sites with 3 ad units and 2 link units though. I know ad units won't display after 3 ad units, but it doesn't prevent the link unit code from executing. Edit: http://www.google.com/support/forum/p/AdSense/thread?tid=353fae38e2ce17d5&hl=en
https://www.google.com/adsense/support/bin/answer.py?hl=en&answer=9735 You are allowed to place 3 normal ad units, 3 link units and 2 search boxes.
the op is correct but to receive better clickthrough rates and higher cost per click i recommend using 1 large rectangle ad and a text ad in your side bar.