I create a structure of folders on my computer by year and month. For each year (e.g. 2006) I create subfolders for each month(e.g. Jan, Feb etc). Then within the subfolder, I create additional folders as needed for specific events (birthdays, graduations etc). I also create a custom name when downloading the picture as opposed to saving them to the hard drive with a default numeric or date value. This allows me the ability to search for a picture in windows using a specific word that I may have used in the name of the picture.
I utilize photoshop; however, it takes a while to learn. There are still many features I don't know how to use.
I backup all of my photos every 6 months. While it is true that the DVD's won't last forever, I figure if I back them up once every 6 months I shouldn't have anything to worry about. I then backup my current photos at the end of each month or when I download a large quantity of pictures. I use Nero for backing up my files; however, the newest version of Nero doesn't give you enough extra features to be worth purchasing and has been plagued with bugs. I purchased a copy of Nero 6 (previous version) from ebay for less than $20 and it has all of the features I need and more. I highly recommend Nero for backing up to DVD. If you are backing up to CD, don't bother with any software since Windows is capable of burning directly to the cd.
For my prints I either upload pictures to the Costco.com website or take them into my local location. Its a few extra prints to upload to costco.com and pickup at the store, but if its just a few pics it doesn't add up too much.
Hope this helps.