"Also, the more credit cards one has, the more your credit rating gets reduced"

Nope. Credit scoring is weird -- there are many different mathematical models, which act differently in different situations -- but generally, having more credit available is a good thing, as it shows that lenders generally have confidence in you. (The type of credit also matters, with mortgage and "premium bankcard" accounts reflecting well.) That said, having 10+ credit card accounts might indicate reckless spending, and the models also incorporate several factors that are negatively impacted by opening a bunch of new credit cards:
- number of inquires on credit report, fewer is better
- age of newest account, older is better
- average age of accounts, older is better

None of these will have a big impact if your credit score's already great -- which it is if you've paid on time for a long time -- but you shouldn't close accounts that are (a) 1+ years old, (b) always paid on time, (c) don't have annual fees. Doing so will definitely hurt a credit score.

But... I read through all the fine print, and there's nothing that says you have to keep the account open for X months to keep the points, so I say go for it. (The United card says it has to be open for six months, or else they can take the bonus points back.) That's what I plan on doing, after rolling the credit line over to another Citibank card.