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I've got over 1600 books on my Kindle 3. Storage is about 3/4 full. Many of the books are fairly short, and part of the storage is taken up by mp3 files, perhaps 60 or so for background music.
Keeping all that straight was driving me crazy on my Kindle 1, so I bought the K3 for the 'folder' capability. Anything I haven't read goes into the home page by default. I have one labelled Read for stuff I've finished. One is labelled Abandoned for stuff I started but gave up on. One is labelled Kindle Specific for things like My Clippings, Mobipocket Guide, Kindle User's Guide etc. I also have one for Samples and another for Collected Works. The most important category for me is labelled Current. Anything I plan to read real soon now goes in there.
I've considered categorizing by author and/or genre, but I'm way too lazy and I don't think it would do much for me even if I went through the effort.
As far as finding stuff, any time I read a passage that resonates with me I highlight it, which puts it in the My Clippings file. So any time I want to find 'that one thing I read that one time' I start in My Clippings and I usually find it that way.
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