We've been slowly trying to purge down the amount of toys our kids have. I know for my boys, having too much/too many is definitely overwhelming and also stifles their creativity and imagination. I've been trying to really keep track of what of their toys they actually play with and what just gets tossed aside, and then we talk together as a family. I think once we move (in a couple months), we will narrow our toys down to the following:
*cars/trucks (some Hot Wheels, some wooden, but purge most the plastic/noise ones)
*Playmobil sets (ds#2 just got a couple for his birthday yesterday and the older two love them)
*Dress-up clothes (playsilks, Halloween costumes, etc.)
*A few stuffed animals/Build-a-Bear things.
*Maybe the Little People ... I'm torn on this one and will probably keep the ones we have (we've had them for almost 6 years now since ds#1 was a baby and have thinned them down to just two sets) until ds#3 is closer to 3.
Not included in that list are books, books on CD, art supplies (ds#1 especially loves to draw), board games/games and activity books. They also each have a bike (well, ds#3 just has a little ride-on toy, but will get a balance bike when he gets a little taller), scooter and skateboard, but those stay outside in the shed. And, we also keep a fair assortment of sporting equipment outside in the shed.
It still seems like too much to me, but it is at least down to the basics that they play with on a weekly basis. Plus it all is more open-ended and crosses age differences (for instance all 3 like playing with the Playmobil stuff even if the baby's idea of "play" is a little different than his two older brothers' idea of "play"
We keep the wooden blocks in ds#3's old Moses Basket in the living room. Ds#1 keeps the bigger-kid Lego's in his room and ds#2 tends to keep the Duplo sized ones in his room. When we move, ds#3 and ds#2 will share a room, so combined, they will probably have the Playmobil and Duplo Lego's in their room. Each boy will probably have their collection of cars (the older two get as many Hot Wheels as can fit in their small car suitcase thing - I think it holds at most 24, though we keep it down to about 12 each ... who really needs more cars than that?). It's the Playmobil stuff that I need to figure out how to store on their bookcase/cubbie while keeping the accessories from getting lost.