There are several software packages that you can use to organize pictures. Some are better than others to me, but it's really a personal feel for what you like. My suggestion is that you download several demos and then pick the one you like the most. I'm a fan of Picasa (free!) but others like to categorize things more than just by directory. (Picasa, Adobe Photoshop Album, Corel Photo Album, Ulead Photo Express) These programs have some minor editing capabilities but Adobe and Corel have higher end editing programs (Photoshop Elements is pretty good and not a bad price).
I keep my pictures in a directory on my secondary hard drive and just create a directory for each month and then for a special occasion, another directory under that month. (Pictures/2005/December/Disney Trip) I keep a backup of the pictures on an external hard drive and many of them on a laptop also.
Hope that helps! :wave: