Drobbit's right, if your hand is full, but you still draw that many cards, you might have to discard one.
If your hand is full and you use this card, you only have yourself to blame if you end up discarding. Just don't use it when your hand is full.
Also, I think the idea of being able to use the Mulligan as many times as you'd like would take a lot of chance out of the game and take away a major element of deck building (working with probability). Not a good idea, in my opinion.
Anyway, I've seen this idea a few times already, and I'm still not sure how I really feel about it... I'm not really a huge fan of the idea, I must say -- but I don't
dislike the idea. My only criticism at this point is the card description, as it's a little strangely worded. Could it be something like, "Shuffle your current hand back into your deck, then redraw"? I would think the "that many cards" part would be a given, but maybe not...