Just in case you were wondering, it turned into 255 because those are the numbers that correspond to those letters on the keypad. 2=ABC and 5 =JKL so when you typed in "ALL" it thought you were trying to enter a phone number manually since nobody in your contact list is named or start their first or last name with"All".
Like JJ said, it won't let you send to a large group without entering each name seperately. My guess is that they errered on the side of caution by disallowing mass SMS ---not everyone has an unlimited text plan, and the charges could rack up very quickly.
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