Damsels, while colorful and easy to keep, are very aggressive. If you are going to keep them, all the other fish in the system must also be aggressive.
Many people start out with damsels, only to wish later that they had something else.
Yes, if you want fish like firefish, the damsels usually need to go.
As for the original question, a 29 gal tank is going to be limited to about 3 or 4 small fish. Adding 5 damsels along with the other fish would be overstocking the tank. However, if the tank were a lot larger, a group of damsels would be a better choice than two. With two, one tends to beat up on the other.