I am also of the school of thought that I love to have the book there in my hands. Nothing beats the smell of a crisp, new book or the battered corners and broken spine of a well-loved oldy.
I have run out of bookcase space and have taken to piling them up against the wall, on the chest of drawers, hidden in the wardrobe, double stacked. I really need some more bookcases as, for me, part of the pleasure of a book is being able to look along the rows and see what I have.
When I have more bookcases then I will organise mine by colour. My wardobe is already organised by colour 
and I love it, it will give me so much much pleasure to do the same with my books!
On a separate note, I discovered the most AMAZING app for my iPhone a couple of days ago.
It's called BookCrawler and you scan (or manually input the title and author if it is an old book) the barcode and it automatically inputs the title and author of the book onto your phone. You can then search for books by title or author, you can see the cover image, you can indicate whether you've read it yet. You can sort them how you choose.
I can have a list of all the books I own at my fingertips. No more pondering in a charity shop about whether I already have a book and just haven't got round to reading it, check BookCrawler, bingo, already got it - save my pound and buy another new book!
It is brilliant and I love it!