I did a big sort out of my DS's room a few months ago. It took two entire days to do it properly. What I did was:
Cull books that he'd grown out of / DVDs that hadn't been watched. Culled board games that had lost parts / weren't popular anymore. Stacked the remainder neatly on shelves.
Bought one of those Ikea units with baskets and assigned one basket per type of toy (e.g. lego in one, small animal figures in another, vehicles in another).
Bought one large toy chest for bigger toys.
Bought two hobby boxes (plastic crates with small compartments) for tiny toys.
Bought a cheap plastic crate as an arts /craft box (stored out of reach, only to be brought down with my permission).
Chucked out anything ancient, broken or clearly not played with for months.
Kept one lidded wicker basket for the unsorted crap that will inevitably build up to accumulate in (especially when I am trying to clear the floor in a hurry to hoover or whatever). It's not huge, so when this starts to look full, I sort it out/chuck bits out etc. It's taken about 6 months to build up this time.
Oh, and on the day I finished sorting the room out I took DS (and DH) on a magical guided tour of his shiny new room, pointing out what went where
p.s. I am no Domestic Goddess. I hate housework. But this has definitely helped to keep the chaos at bay