Sorting by color vs. sorting by type = you can't win.
If you sort by color, for example, all red 2x2, 2x3. 2x4 in the same bin, then it can become a real chore trying to find a particular piece, especially when you're largely using that piece and don't have a lot left. For example, you use almost all your 2x4 bricks... finding another one in a bin full of the same color 2x2 and 2x3 bricks sucks.
However, find the last few red 2x4s in a bin full of 2x4s of other colors is usually not that difficult.
On the other hand, if you're building something large (let's say a house, for example), you'll want mostly the same color - so if you sort by type, then you need all your bins to get all the various types of pieces in that color.
This is assuming you have copious amounts of all the pieces.
What I've finally started doing is both... except for the large number of bigger pieces, I've been moving towards using the Akro-mills storage drawers and sorting by both color and type. It's still not easy, because I may have just a few 1x1, 2x2, 1x3, 1x4.... and what would be several drawers (or more) of 1x2, because that's the most common piece I use for making buildings.
Still... even if I have to have excess stored separately, having most of the different types of pieces in one color in one unit makes building things like that a lot easier.
Of course, it took me years (and well over 100k pieces) to finally make my move to that kind of system, and I'm not even remotely done - just a few colors so far (the ones I have the least of).
The other problem is there are some types of pieces - greebles and technic, where it often simply doesn't matter what color you have - you just need the right piece. If you've got them all separated by color, then you may need to search each color's storage unit to find what you need.
So... whatever works for you, but my warning is that I started off trying to be really "neat" in my storage and found that it wasn't conducive to building. There's no way you can sort that completely eliminates all problems, but what you decide should make it easy to pull a bin or storage unit out and largely make what you want to make without having to get bits and pieces from a dozen different units.
Edited by fred67, 14 August 2012 - 04:51 PM.