I've been organizing my digital photos for almost 10 years now and have used a few different approaches. My primary computer is a laptop, which is no match for the hundreds of gigs worth of photos that I've taken over the years. I pretty much only have room on my laptop for photos from the past 1-2 years. I also have a home PC which has a 1 TB internal drive (which I added for less than $100). That PC is hooked up to my home network and has all my photos from 2001 onward. I usually take photos when I'm on the road, which is also when I have my laptop, so they always go there first. Here's my approach:
* Occasionally dump photos from camera to laptop when my memory card fills up
* Keep everything from the past year or so organized on my laptop
* When I'm home and connected to my network I use a free program called SyncBack (http://www.2brightsparks.com/downloads.html) to synchronize what's on my laptop to the PC. SyncBack is great and is pretty powerful for a free program.
* Every so often I back up the photos on the home PC to a DVD
So basically, memory card overflows to laptop, laptop to home PC, and then that to DVD for archiving. Although I'm not sure I trust the DVDs for real long term storage, so I may make new ones some day.
For online storage & sharing albums with friends I use Phanfare (http://www.phanfare.com). I upgraded their unlimited storage which I think is maybe $80 or $90 a year. Their slide shows are great, because you can upload songs/mp3s directly from your home PC / iTunes to the slideshows.
It all works pretty well for me.