Sue,
Sort and store your fabric in the way that is pleasing and helpful for YOU. Mine is folded in a particular way if I have a yard or more, and then folded differently if I have 1/2 yard, and then a third fold for fat quarters. Fat quarters are in their own larger-than-a-shoebox plastic bin.
My storage consists of plastic bins, sorted by theme and color. I have florals, butterflies (my fav), blenders/batiks, kids/brights, "groups" (I bought 3 or 4 as a matched set), WoW, and then "other." Holidays are in their own bins. This system works beautifully for me because I can tell at a glance if I have more or less than a yard of a particular fabric. If I have a "set" of fabric, I just need to go to the "groups" bin. I'm sure I will revise the system as I go along ... but for right now ... it works for me.
Start with what you think will work and then go from there. And .... I know the feeling of being overwhelmed with fabric! :lol: :lol: :lol: