I have tried organizing my small scrap stash by size a few times, but it seems that I think in color. I always end up digging around for the right color when I am actually using my scraps for something. Right now they are in rainbow order, with extra space for neutrals, holiday themes, and multi color prints.
I don't think there is a right or wrong way. Color works for me, but size might work for you.
Some people think "in a heap" is best. Isn't it great we all have the freedom to choose, and we are all right!?!