1:30 to 2:00 sounds alright to me - personally, I don't mind not having chapter markers, since I generally will listen to ANY story (seriously, of any length) all in one go, or just that one story until I'm finished with it.
My MP3 player (Zune), at least, remembers my playback position on podcasts, though, even when I play other stuff, so... that probably makes a hell of a difference.
But I really wouldn't mind the occasional Podcastle Giant 2 Hour Spectacular. Does the blanket "NO SERIALIZATION" ban apply to doing what some people have suggested - that is, splitting the story at a convenient break point and releasing two audio files on the same day as part one and part two of the story? Because I think that might be a good call. I'm not sure where I stand on double-releasing the files in multiple formats, though. It seems like that might get a little bit needlessly complex.