Yes it is.
Following the following KB article: http://support.microsoft.com/kb/955968
In SP1 for SQL Server Compact 3.5 is different from previous versions. Please check KB article for differences.
MaxLogFileSize and MaxPreviousLogFiles are the two keys that we can use to alter the file size and increase the previous log files.
There is a minimum value for MaxLogFileSize (1 MB) and the default value for MaxPreviousLogFiles is 2.
When enabled, and each time IIS re-starts, a file will be kept in the log folder (up to 3 files created). This can be changed:
The SQL Server Compact 3.5 SP1 log management functionality limits how many old log files are kept on disk before these files are deleted. Note By default, two old log files are kept on disk. You can configure this number to a maximum of 99. To do this, set the MaxPreviousLogFiles DWORD value for the following registry subkeys:
HKEY_CURRENT_USER\Software\Microsoft\Microsoft Sql Server Compact Edition\v3.5\Log\Sqlceca
HKEY_LOCAL_MACHINE\Software\Microsoft\Microsoft SQL Server Compact Edition\v3.5\Log\Sqlcesa
HKEY_LOCAL_MACHINE\Software\Microsoft\Microsoft SQL Server Compact Edition\v3.5\Log\Sqlcerp
HKEY_CURRENT_USER\Software\Microsoft\Microsoft SQL Server Compact Edition\v3.5\Log\Sqlceca
NOTE: If the registry keys are not found in the Registry, then you will have to create them. You will have to create (for example) a key for LOG, a key for Sqlcesa and then a DWORD reflecting the alteration you want (log file size or number).