I put small scraps like that into clear plastic shoeboxes, by color. I will cut strings from 1.25-2.25 if there's just a small length leftover because I like to make string quilts. But I prefer to keep as large as possible because I don't know what I'll use it for and I don't want to limit myself. But if you know you use a lot of 5" squares, for example, it doesn't hurt to cut those to size if you won't waste much fabric doing it.