I was just asked by the LA TImes for my opinion on storing and organizing digital photos. Here's what I told them...
The biggest problem with organizing photos is simply taking the time to do it! Once you've carved out some time there are many simple ways to organize digital photos. If you have a mac, iPhoto is an easy click and drag program to add and label albums. iPhoto itself can hold up to 250,000 photos. However, it can be difficult to search for an individual photo. That's where Folders/Albums and Smart Folders/Albums come in. Smart Folders or Albums are more currently updated and you can search with different options (ie. date, location, face, event). So part of the organization is knowing beforehand how you'd like to divide up your images and make sure you label all of the files!
If storage becomes a problem you can create different photo libraries that can be exported from the original library. But you may have duplicates of the original files which you should delete take use less storage.
As far as photo organizing apps go Photo Manager Pro is a great option for 3 bucks!
When all else fails just take some time letting go of the photos/albums that are of no use to you anymore. Holding on to photos of exes, people you don't spend time with anymore, or photos that bring to mind a negative time in your life is just bad mojo!
Here's a link to the article. Some other people were quoted and have some great ideas!