I have five kids and I've been keeping certain things from the time my first was born. My youngest is four - not a baby anymore! - so one of my projects this summer has been to go through, pare down and re-organize everything.
First project is a quilt of all their baby clothes. I cut all their clothes into 2 squares - one set for me, with all their squares in one quilt and the other set for them, to make individual baby sized blankets for me to pass along to them when/if they have children. I just have to drop them off at the Amish Quilt shop when I get out there.
Beyond the first year or so of clothes, I kept all my favorites of each of theirs to make rugs - both braided and knitted. I am happy with my progress on this project. After years of lugging around many 55 gallon bins, hours and hours of time cutting the clothes into strips, and organizing into color, I am at the point of maintaing clothes they no longer wear and getting to them in a reasonable amount of time. The rugs will continue to be an on-going project...although, those are more for me than a momento for them...
They each have a baby book, which includes notes and pictures from our pregnancy together thru their first birthday. The pages following are yearly 8x10 photos taken around every birthday. Other than that, I do a yearly family album. That's where all of their pictures of important awards, projects or writing samples wind up.
I didn't have it together enough to journal on a regular basis for each of them, but I did keep record of cute stories, milestones, funny things they said, etc. on my calendar - it was the most safe and easily accessible!. I am in the process of transferring all that information into one nice journal. They get it when I die, they can share or have copies made. This one is for me as much as it is for them. I know I would stress too much about doing it just right, or making it even if there were individual books, and I wouldn't wind up doing it. I plan to just continue jotting things down directly into the book from now on.
As for memorabilia, I saved way too many boxes of my oldest kids stuff. I knew as I was saving most of it that I wouldn't wind up keeping nearly any of it, but at that point, it was easier emotionally to chuck it into the "save" box. I recently (as in the last two weeks!) went through everything and actually kept very little - everything from five kids fits in one folder. I plan to laminate the little love notes they gave to me and to each other, and plan to keep them in a binder, and my absolute favorite pictures will get framed to hang up. I'd be open to a memory photo box for each kid, but I don't know what I'd even put in it...
It sounds like a lot, but its really pretty minimal - individual baby books, small quilt each, family photo albums and a shared journal.