I did a cull of the toys before Xmas, and figured that once a year was good. DD's birthday was at end of March, and I think we need another one now!
I have one carton where we keep the really good baby toys (DD is 3). She does still like to pull them out, quite regularily, and they are nice to have on hand if we have a younger visitor.
I also keep an eye on stuff as it comes into the house. Yes, it may sound terrible, but even as we are opening gifts, I am thinking, "are we going to keep this?" If its something that I don't want to keep, then I try to keep it either in its packaging or in good shape, so that it can either be regifted or given to a toy drive at Xmas.
I would like to instill in DD the idea of passing things on, especially as we have received so, so, so much from others since she came along. We hardly have bought anything for her, or have gotten it second hand. I'm not sure if she's ready yet for that concept. I'd like to get to a point where she can decide herself, with a bit of gentle guidance, what goes and what stays.
The idea of rotating toys is great - I've just never been organized enough to do it!