Oh K....
Christmas must be coming....I swear I go thru the same thing every year and vow "enough is enough"! I am definitely a believer of less is more (and believe me, my kids have more than I'd like to see them have). I first of all don't start a big clean out until the kids are out of the house, this of course avoids the fight of "hey, I want that". There are plenty of charities that will accept good, used toys and this is definitely the time to do it.
I just try and go thru what they have and really ask, "is this something they are using?" If it's something they haven't used in a while, pass it on. If it's something that doesn't hold sentimental value, get rid of it. Chances are if your kids aren't getting to it, they've even forgotten they had it in the first place. My kids gravitate to the same things over and over, so that's what you keep and cycle out the rest. I've also gotten to the point that if games are missing pieces, pitch them. Admit it, it happens to all of us. Your kids won't get the games out anyway if they're missing pieces, and may be when you do that big "clean-out" you'll find missing pieces.
I've definitely found that a toy box doesn't work - it doesn't allow the kids to see what they have. I'm a big believer in shelves and bins and I've even drawn pictures of what goes in each bin for my 5 year old who can't read yet. That $50 bin set I got at Target has been invaluable. I think you've always got to be going thru their things to move stuff on. Another place that I found got out of control was our book shelf. As are kids grow, their book tastes change. This is always a good chance to share with someone else, or again, donate them to a good cause, charity, rummage sale, whatever.
I take those big garbage bags and put them right in my van - out of sight out of mind.
As for Christmas, I'm deciding to let people know that a small gift card is fine - something my kids and I can do on a rainy day say in March or April. I really think from Mom and Dad (or Santa!) 3 - 4 gifts is sufficient. Books are great, play-doh and crafty things are fun too - I always like to replenish those "re-newable" activities. I then don't feel like I've got this $50 toy just sitting around not being used.
Okay, well those are my random thoughts for the morning - I hope that helps. Hang in there and know that us other good moms are out there fighting the good fight and trying to get organized as Christmas looms.