I do a combination of these techniques. Most fabrics are by color. I keep them in a shallow plastic box folded sort of like fat quarters so I can open the box and see what I have. Some are by theme like my dachshund fabrics, car fabrics and Texas fabrics. Larger pieces (over 1 yard and hung over hangers in the closet. It has a double rod which makes it easy. I also have some smaller plastic boxes for scraps sorted by color. I labeled all the boxes and have them on shelves which frees up more floor space. Books are in some old glass fronted cabinets that were in the study of my other house but I don't need them in the study here. They have shelving down below where I keep machine manuals and paperwork.