I cant believe no one has mentioned this:
PARE DOWN THE TOYS!!

After you have done that, it gets easier.
Here are how we have the toys:
I have a clear storage bin for books. They stand upright in it,a nd It is great for library day. I have all felt pieces in a basket. I wish I could do upright folder in a filing box, bc they would be easier to find, and I do aspire to that. I have a large wicker basket with hanles for misc toys. I have a desk that's shelves hold more books. I have a wooden crate for blocks. Both the basket of toys and the crate of blocks are tucked under tables. I have the Band in a Box by melissa and Doug and most of their instruments are in htere. I also have a pretty basket on the table that hold a few more beautiful wooden ones. I have a wicker hamper with a lid that holds our "sensory toys" and I have a "gardening bag" you know, the ones with all the pockets on the outside? That holds the puppets. So, that is our living room.
In the kitchen, I have a rubbermaid tote tucked under a small card table. That holds legos(we have alot of legos)
The garage is our playroom. I have a low lang table for playing and crafting. I have school stuff tucked under there in rubbermaid totes. I have puzzles and games on open shleves. I have art supplies in pencil boxes and glass jars in a cainet out there.
In their room, they have a small lego box that holds the toys, I put the dress up clothes in a big tote and those are in the closet. On the other side of the closet(this is a tiny closet) is a sweater box, with no lid and their stuffed animals fit in there. That is why we cleared out so many stuffed animals the other day, so they could fit in the box.
I hope to get a digital camera this month, and then I will post pics of my house!
Listing them all like this, it sounds like a lot of toys, but it really isnt. I live with my family of five in less than 800 square feet and my friend walked into my house the other day and said "It is so spacious in here"