Does your fabric ever get to a point where you can't find most of what you are looking for? Mine definitely got that way earlier this spring. The last I remembered it had been neatly put away using the system I am going to describe. With the UFO Challenge my guild announced for this year, I began to pull out older fabrics and UFOs expected to find all of it still neatly organized. However, what did a find but a scattered mess!
Of course, there is no easy solution once you get to this point. Things get worse before they get better. Typically I have most of my fabric in plastic storage containers: some are in a closet and some are in what used to be my daughters' play room. To begin this process of re-sorting, I ended up with most of the fabric stacked on two beds. Well, I admit - there was some of it on the floor, too. It overflowed!
How do I sort it? First of all, anything that is designated for a particular quilt is packed with other fabrics for that quilt and the unfinished portions of the quilt - if I already started on that - and hopefully it also contains the directions for making the quilt. (This was what got me on the path to reorganizing - I had issues with patterns not being where they should have been ... gremlins must have been sifting through my fabric the last time it got put away!)
Then I work with larger pieces that are not set aside for something in particular (these are large enough to be considered for possible quilt backs or to be used as a main fabric in a quilt) and place those together. Still more categories... One container is for general holiday fabric. Most of mine is for Christmas, but I also have Easter, Halloween, St. Patrick's Day, etc. I have a separate container for the few fabrics I keep on hand that are not quilters' cotton - fleece, flannel, upholstery fabric, etc.
One of my fabric designations is "scraps." These are obviously for scrap quilts or can be used if I need a small piece of fabric for applique. I also have a separate area for new fat quarters, still neatly folded. I use a photo storage box for them and they fit really well. The remaining fabric gets divided into plastic containers by color. With these I try to make sure there is at least enough there to complete a 12" block or two. After more than 10 years of quilting, there is no problem filling these containers either. Some of the colors are combined. My "red grouping" is red, pink, and orange. "Blue" is for blue and purple. You get the picture. Actually, you don't get the picture - I could have taken a before and after picture, but some things you just don't want to see again!