Couple of ideas (since I'm doing the very same thing)
Scan and store on disks/flash drives/external hard drives/hosting service as suggested above
Definitely take them out of the old-style photo albums and put them into archival quality scrapbooks/photo albums.
Photo storage boxes are ok, as long as #1 the pictures can lay flat, and #2 they are archival quality.
What I'm in the process of doing right now is looking at the thousands of pictures my mother took. I bought some archival safe storage pages - a CD goes in one side and a contact sheet goes in the other. I am going to eventually get everything that isn't scanned already scanned and save them to Photobucket and/or Picasa. Mom was working on a memory book, and the CD I'm currently working on seems to have everything in it. Dad and I are going to look into what it would cost to have the pictures all printed in a hard back memory book and offer it to all my siblings and their kids. It will be Mom's legacy. Dad's 81, and while he's healthy, I'd like to see this project done before he joins her.