My HT has a "closet" area. Many years ago it was used to store hardware. That room has always (as in, since the late 60s or early 70s) been a media room and the closet (basically like any normal closet, with double louvered doors) has been somewhat inefficient storage for media for the last several years. I'm finally fully converting it to be solely to store media. It is about 7' wide and will probably have 11 shelves, going from floor to ceiling and side to side, to hold all the DVDs, CDs and whatever else needs to go in there. I just use a very simple system, like Ed, but a bit expanded. CDs are all together, alphabetically by artist or composer. I have a lot of large Classical box sets (with anywhere up to 170 discs in each) and they are stored separately by Composer. Movie DVDs are together by title, though I do put a few large series' together under the main name (such as "Bond"). TV shows are separate, also alphabetized and finally High Res Audio (SACD, DVD-A) separate by artist or Composer.
All the music will be available on the whole house music server. Most of it is now, but I have as many as a thousand more CDs to add. Still, I like the formality of taking and physically playing a disc at times, plus then I know I am getting maximum sound quality.
Years ago I used to keep computerized lists, but in the end I think they are just too much of a pain. So long as I can find what I want, I am happy and I don't like the work involved with anything more elaborate.