This is a very interesting question. Allow me to engage in a thought experiment...
DISCLAIMER: What I've written below is just a thought experiment, and I have no idea if it's supported by scientific evidence. I'm betting there's been computer simulations of such phenomena, but those are admittedly not always the best way to confirm a hypothesis. Just allow me to muse for a moment.
Imagine a diverse environment which contains a number of organisms, which belong to a number of different species. According to evolutionary theory (I think), if there are a lot of different environmental niches and only a few species, over time you'll tend to see the emergence of new species to fill the different niches -- if a new species is better adapted to a niche than the already-existing species, it'll prosper and potentially lead to even more species. In this way, the number of species tends to increase. There's some complications because organisms themselves can create new niches (e.g. parasites), but that's the general idea.
However, this can only go so far. An environment can only support a finite number of species. For one, if there's absurdly many species that means that there's only a few organisms belonging to each species, which tends to make the species very vulnerable to extinction. Additionally, if an organism is adapted to an incredibly specific niche it can be screwed over if anything happens to that niche. So, this tends to put a limit on the maximum number of species.
However, there are a number of ways in which we can have extinction. One way is that a new species emerges which takes over the niche of another species -- this tends to break even in the total number of species. Another way is that there's some sort of mass extinction event, like an ice age. In this case, we see all of the species which aren't able to adapt to the new conditions die off. The surviving species produce more species to fit the emptied niches, until a limit is reached as described above.
If one were to graph the number of species in an environment over time, I imagine that you'd see something like a sigmoidal curve, with the number of species increasing until it reaches a particular equilibrium value (where the rate of increase is balanced by the limit of available niches and small-scale extinction). Periodically you'd see mass extinction events, which would correspond to a sharp drop in the graph. However, after such a drop you'd see it climb back up to the equilibrium point.
Now that I look back at my musing, species are a lot like companies in a free-market economy in many ways, in how they adapt to different niches. I wonder if there's any plots available of the number of companies in existence in a country at a given time, also showing things like depressions/recessions and the following bounce-back.
Excellent analysis! You're thinking, and on an issue like this, that's how we have to deal with the evidence the past has left us.
You may well be right that there's a saturation point where extinctions start occurring. It's a good argument for those on your side to use.
And given the current state of our knowledge of the distant past, it's arguments that we must put forth.