I saved DS1's stuff and DD's stuff until I was pg with DS2 and found out it was a boy. At that point I donated, handed down, or otherwise purged most of DD's things other than a handful of special pieces.
There's a 6 year gap between DS1 and DS2 but I'm glad I saved his clothes. DS2's size and seasons lined up well so they've been useful.
We use rubbermaid bins divided by size, and then I stack them on our big shelving system in the basement. We have a few of those large 5 shelf storage shelves costco and home depot sell. That way they are up off of the floor and out of the way for the most part. In our last house we didn't have a basement so we stored everything in the attic.
Now that DS2 is outgrowing things, we donate as he outgrows.
Mama to DS-2004
and a new addition-ds born march 2010