I do mine by size, and then color within that size.
I put fat quarters together, then 1/2 yards, 1-2 yards, etc.
and I arrange them by colors. I have a tote full of larger yardages for backing. I also have some smaller clear totes with all the fabrics for certain projects that I labeled "ready to cut". Then after I cut that project is done, I can use it again. I try to cut projects in the fall and winter to get me through the first part of spring and summer because I am so busy outside that I only find small blocks of time to sew, and when they are all ready to go it makes it so easy!
I will be getting a new sewing space soon, and have been thinking about how to arrange it, but OMG if I do that, my DH might see how much fabric I really have! That could be disasterous!
Good luck with your sorting and folding!