Well personally I would love to throw it all away. But my dh is a hoarder. The loft is full of past cinema tickets, birthday cards, random letters and notes. I made an executive decision to recycle last year's Christmas cards. He wasn't too bothered but I would love to chuck all his junk away.
To avoid the need for extensions, look at your clutter size and decide how much it's its real money value, then decide what do you need to keep it (i.e. board the attic, a bigger house, a garage, etc), calculate the cost of the extension/move. Then bin the clutter and use the extension/attic/garage money on a family holiday which would bring more memories that a bunch of paper.
I keep a few pictures - first one from nursery, really good ones, etc - they're in a box file for each child, along with the important things like birth certificates and bonus bonds. I've got their first birthday cards (I think). Christening cards and birth announcement cards are stuck into albums. Everything else goes in the bin!
I also have a drawer full of photos, which shouldn't expand too much now we've bought a digital camera
If you organise your crap, I find you can keep more of it