I pretty much organized as I accumulated. I didn't get as into quilting as I am now until I moved back "home"- Mom already had her sewing room pretty much set up, so all I had to do was refold the fabric to fit the shelves. We had a minor "disaster" when we found a leak coming from an unused bathroom next to the sewing room- of course the plumbing access was behind our shelves in the closet- I came home from work to find all my fabric tossed in a pile! (My stepdad's doing :P) We thought the issue had been taken care of, and all the fabric went back... then three days later, again! I got to the fabric first, thankfully, so it was all stacked neatly to be put back when they finally fixed everything.
So I've had to "reorganize" a couple of times. My stash is pretty much at its limit right now, the shelf with yardage is packed pretty tightly. The only way I can get more is if I cut some stuff down for projects (most of it is earmarked for certain patterns), but all of my project boxes are full at the moment, and I can only fit a certain number of those. It's a good way to keep things from getting out of hand.
My mom has decided to get rid of most of her linen closet, so I'll be moving most of my art supplies in there, at which point I'll have more room for fabric, so I'd better be careful...