BH's scrap system sounds great, but I hated the idea of cutting everything into pieces and then finding out I needed one big piece.
In the end I just sorted all my scraps by color, folding them (somewhat) neatly and sliding them into a divided box. When I do something scrappy, I just look through and find something I like together to make my block.
Our yardage is ruler folded and sorted by color. Holiday fabric is all together. Solids and blenders are all together. Fat quarters are all together and sorted by color also.