Crowded intracellular environments present a challenge for proteins to form functional specific complexes while reducing non-functional interactions with promiscuous non-functional partners. Here we show how the need to minimize the waste of resources to non-functional interactions limits the proteome diversity and the average concentration of co-expressed and co-localized proteins. Using the results of high-throughput yeast 2-hybrid experiments, we estimate the characteristic strength of non-functional protein-protein interactions. By combining these data with the strengths of specific interactions, we assess the fraction of time proteins spend tied up in non-functional interactions as a function of their overall concentration. This allows us to sketch the phase diagram for baker's yeast cells using the experimentally measured concentrations and subcellular localization of their proteins. The positions of yeast compartments on the phase diagram are consistent with our hypothesis that the yeast proteome has evolved to operate closely to the upper limit of its size, whereas keeping individual protein concentrations sufficiently low to reduce non-functional interactions. These findings have implication for conceptual understanding of intracellular compartmentalization, multicellularity and differentiation.