PayPal does this, which means I lost the ability to use PayPal for a few days because my password manager generated something longer than the 16(!) or so characters PayPal accepts. If you're going to implement a form to set or change a password, you should probably let it accept a length greater than whatever you're going to store and validate it client side (and in the backend for those who have javascript disabled, though you should validate in the backend anyway).