Personally I've subscribed to the school of thought that the fewer restrictions there are, the better.
I truly believe that the '25% rule' should only apply to those using guild gear.
That is literally the only impact that your choice of guild could have in the matter after all.
The arena is a 1v1 tournament format, not a team fight format.
The investment in backpack slots and gear to reach the competitive level is quite a hefty one!
Those who have made that investment should be rewarded, not punished.
It completely defeats the purpose of obtaining private equity if you cannot fully utilise it as you see fit.
After reading some of these responses though, it would appear the general consensus is that some restrictions are necessary to prevent a monopoly.
Recognising this, I think a bump to 50% (either a blanket or conditional increase) would be a fair compromise between the two schools of thought.
As Toreth pointed out, the chances of any guild being able to monopolise the arena is statistically impossible within these parameters.
More people from active guilds would be able to play, spurring more activity and competition.
A win/win as far as I'm concerned.