I keep EVERYTHING! My son started preschool when he was 2 and he's in K now. This is what I've done...
I have a binder for each year. I put 12 page protectors in them, one for each month. Whenever my kid comes home w/anything, I 3 hole punch anything that will fit in the binder (I've also included his schoolwork). Anything small or loose, that lays flat or I can fold (like the paper plate art) I put in that month's page protector. Anything else too large or bulky I put in an oversized bin w/a lid. Since I date everything, I don't feel I have to keep anything in the large bin separated.
I take a picture of only the nice artwork or drawings he's done or he has a special story about. I also date everything that comes home. I have a table near the door that has the binder, the 3 hole punch and a pen on it and the clear bin right under it. I go through his schoolbag as soon as we get home and immediately date everything and then throw it in the binder, page protector or bin.
I have 4 large binders for each year and I only have 1 bin, which is getting full, but not bad for after 4 years, so it actually doesn't take up alot of storage space. Its nice to have everything organized on a daily basis and has made it easy for us to look back on each year. All we do is pull out any binder and see how far he has come.
gl! Enjoy all that art!