Alas, the $64 thousand dollar question. The age-old question that I have yet to solve. I have gone through so many ways to organize fabric since I started in 1978 when my scrap pile got out of control.
The system I have now is I went to Costco and got clear plastic totes and sorted yardage fabric by tone on tones, holidays, novelty prints, flowers, etc. Whatever I had a lot of, I sorted into a box. My scraps are a different story. I use smaller clear plastic boxes and sort by type of cut (triangles, 2 1/2" squares, etc, etc.) I iron them and try to keep them neat. If I have more than a box full (like shoe boxes) I sort them by color. Whatever lets me see the fabric clearly and is easiest to do.
One of the things I do with longer smaller strips, like a width of fabric, I fold them in half and in half again. This keeps them neat and you are able to see them by color. I do try to keeps scraps in the same color category because when you are doing scrap quilts, you are usually doing them by color and I like being able to see them visually, even if I am using lots of different colors.
Mostly, I try to keep things simple because I do not have the time and I am a non-linear thinker and not a good organizer. If things become to complicated then I just get into a bigger mess and find that I am organizing more than I am sewing, which I abhor.