I sort my scraps by color. I have some that I cut into sizes that I use frequently and others that are uncut. I was using Joan Ford's system, cutting everything smaller than a 10" square into those sizes and then storing the rest separately, but I recently revamped that and everything smaller than a fat quarter is stored by color in shallow drawer units. I fit several stacks of 2" squares, 3.5" squares, 5" squares and then lay larger scraps on top in each drawer. I also keep the following:1. some smaller pieces to use in crumb blocks- those go in a shoebox and get used when I want to do some mindless sewing or if the shoebox gets too full. 2. tiny pieces and strings that are too narrow even for string quilts- get thrown in a drawer and used for thready/scrappy scarves (sandwich the little pieces between two pieces of water-soluble stabilizer and then FMQ until everything is well secured. 3. selvages- been meaning to make a selvage project, but so far I've only used these as ties for the ends of the storage bags I make for my quilts.
Rob