Not how small your house is, or how many toys your son has, but there are a few options. First of all, I hate clutter, so I have taught my kids to give their toys away when they are not getting used...it has help to teach them not to be pack rats and how to share, etc...I usually let them choose what they want to keep - I'll tell them - keep one, give one away, etc...so before Christmas, they will have half the toys they had and have room for more new ones. Kids also out-grow toys faster than you think, so really, a few good toys will last for a long time until they get new ones, then the old ones can be given away. It also helps families that cannot afford toys; I give a lot to Goodwill.
As for the storage options...bins under the bed work well...I also bought my DSD a pretty toy box that doubles as a bench for under her window. Some of the shelving options for closets are amazing these days - if you think vertical, there are more options....installing a shelving system in a closet is very easy - if I can do it, any one can! I don't blame you for not wanting to keep the toys in the garage...mine is prone to bugs also....but my plastic storage bins are a good about keeping stuff out of the holiday decorations. Also - if you buy things that double as storage, that will help a lot as well - such as an ottoman that has storage inside instead of a plain ottoman....or a day bed with shelves built in, or even an armoire that has doors for another room in the house - like a tv stand that has drawers or doors that can be shut and no one would be the wiser. Also - I bought my daughter a hammock for her stuffed animals....it hangs in the corner above her bed and it is a great way to display and keep out of the way (http://www.stacksandstacks.com/stuffed-animals-toy-storag... son likes to display his bionicles and have easy access to his board games, so he has metal racks that store all his stuff....they are rather large, but keep things off the floor...my daughter also has a bookshelf that is skinny, but tall, and it can house a lot of things such as books, cds, figurines, tea sets, etc....Good luck - interested in knowing what you come up with!