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