If JBoss runs out of http threads it shouldn't crash. I will just not server any more clients.
Th setup is done in "deploy/jbossweb.sar/server.xml" (JBoss 5).
Here is a quick introduction to the settings I found: http://tomcat-configure.blogspot.com/2009/01/tomcat-maxthreads-configuration.html
For more info look at the Tomcat docs.
Sanjeet, welcome to the JBoss forums!
Increasing the threads will probably not help. Unless you do some anlysis to see exactly what is causing the problem (heap issues, processor issues, etc.), you could just be making it worse. What analysis have you done so far on your system?