After the initial phase of 'download everything' when I got my first proper ereader a few years ago, I use the following criteria:
1. Is it something that is useful or something I am likely, in any circumstances, no matter how bizarre, to read? [If not, delete or do not download.]
2. Having downloaded it, have circumstances changed and I now am less likely to read it? If so, delete. [Some free books I download thinking I might like them, then read something else by the author and decide they're not for me. Hence delete.]
Everything in ePub format goes on my ereader - I use one with SD card expansion for that reason. I like knowing that all my books are available all the time.
A huge number of books is not necessarily a bad thing; it's like having a library at your fingertips. A to-be-read list is not a to-do list, it's a garden in which to wander at will. I will probably never get my list down to zero, but why should I want to? If the books were free in the first place, I'm not wasting money.
Regarding indexing, I use BookCollector (
www.collectorz.com). Yes, you have to pay for it, but it was worth it for me. I have one index for paper and ebooks, and it also tracks my to-be-read list. Since there is an associated iPhone app, it also means I get to scroll through my catalogue with the speed of an LCD screen rather than waiting for even the fastest eInk.