I don't think there is any one way to do things. I have my stash sorted only by color. Each color has it's own plastic bin or crate. I put yardage in there along with all of the smaller pieces left over after cutting. I personally don't keep anything smaller that about 3" wide. I don't applique much, so don't have a need for tiny pieces.
Have fun going through it all. I'm sure you'll have many ideas pop into your head as you see different pieces.