I wish i had a great answer for what you should do because it sounds a little daunting, maybe just take it little bit by little bit.
What i do, is generally upload the picts from my camera to the computer after each major holiday or event, I needed the reminder from other posters to back it on an external drive!! thanks ladies.
I signed up for emails from Walgreens plus a coupon blog i follow usually posts when there are deals. they often run 10 prints which I have found to be the cheapest (no costco by me). right now they have a deal if you buy 75 pirnts they are 10 each and you can order on line and pick up instore.
So i go through the pictures i have taken of say Easter, I only upload to walgreens photo site the ones i like best and want to print. It allows me to edit to some degree, some cropping some red eye, and i like adding borders to make my own photo thank you cards, and i can also change to black and white. So i edit and then pick how many of each i want, i have two kids so if a photo is of my daugher alone i get one print, if both kids are on the easter bunnies lap i get 2 prints. I do all of this at home online in my jammies, then i select the closest walgreens and place my order, i always select to "pay in store" . usually within a few hours or the next day, I can go pick up my prints and pay, --- I have always been very pleased with the quality at walgreens, some times Snapfish has good deals too but i hate how grainy and weird the colors are, plus i don't like having my pictures mailed to me in a pretty much unprotected envelope.
Once i get my picts usually no more than 75-100 at a time more likely 50. i date the back and put my daughters picts in one album and my son's in another, IF there are some really good ones i might frame them or sick them in a drawer or give away to family.
This works for me because i've been doing it since they were born with their first hospital picts and because i do it every 2-3 months.
I guess i would ask yourself, what do you want to do with the photos????? If you just want to have a record that you could go back to at some point, I would just transfer them all as is onto an external drive or cd.
I do worry slightely that technology will change and it will be harder to print out picts --ex like taking your 8mm video tapes and being able to view them now.
If you like the idea of an album you culd always go through and pick out maybe 2-10 picts for each event/holiday and just go in order. Or you could put all the birthday picts in one hard or soft bound photo book-which is an album you do online and prints out like a book- what i don't like about those as much as it seems hard to control the order your picts are in, I've made one through CVS photo and it just filled it in for me so i had a christmas picture on the same page as a halloween photo which bugged the heck out of me, Plus i didn't find it easy to add captions or labels to the photos. I think if i were doing a wedding photo book it might not have been as hard but because it was my kids for my mom i wanted longer stories about the picts and it didnt' work well.
I had a girl friend that didn't print as often as i do, she just waited until her child's bday and that was her annual time to do it.
Or maybe buy a photo collage frame and then look through and find enought to fill the collage.
This is one of the few mommy things i feel proud of and think my kids will value some day. so i wish you great luck and would be happy to talk to you more if you want to pm me, I have tried quite a few online companies so i have opinions about those, not so much technical knowledge about storage or organziing on the hard drive.