find this:
$modversion['config'][1]['name'] = 'storyhome';
$modversion['config'][1]['title'] = '_MI_STORYHOME';
$modversion['config'][1]['description'] = '_MI_STORYHOMEDSC';
$modversion['config'][1]['formtype'] = 'select';
$modversion['config'][1]['valuetype'] = 'int';
$modversion['config'][1]['default'] = 5;
$modversion['config'][1]['options'] = array('5' => 5, '10' => 10, '15' => 15, '20' => 20, '25' => 25, '30' => 30);
change the last line so it looks like this:
$modversion['config'][1]['options'] = array('1' => 1, '5' => 5, '10' => 10, '15' => 15, '20' => 20, '25' => 25, '30' => 30);
then update your news module and change the number of stories under preferences.