When I was growing up, my mother kept everything under the sun. Literally. When I moved out, I went through piled up boxes of EVERY piece of artwork/schoolwork from first grade on. (not kidding) There was a box for each year of school, on top of old awards I'd won, programs from EVERY choir/band concert, you get the idea. I hated it. I think I kept four things total out of those old, musty boxes. Mom never got any joy out of it, either, because you couldn't access any of it. They were stuffed away on an old shelf.
So I decided to start organizing my son's things early. He just started kindergarten, so I got a photo album JUST for him, and have select photos that I'm putting in it over the years. I went to Hobby Lobby and bought a decorative chest (they're always on sale, usually 30-50% off, I love it) to start a time capsule, of sorts. In it I placed his baby book, copy of his birth certificate, his baptism outfit, the photo album (when complete at age 18) will go in there, his growth chart, and since he LOVES drawing me pictures, I'm putting my favorites in there, too.
As he grows I intend to put in things like Blankie and Mr. Bear, prom photos, special acheivement awards, special events he and I go to together and my journal. I've begun writing a personal journal to pass on to my children once I'm gone. I'm hoping they will share these with each other when they are older, so they can see our memories from Mom and Dad's point of view. Eventually, I'd like to learn to do scrapbooking, but I feel this is enough for right now. :)
The most important thing for me in this is that, unlike my Mom, I get to relive all these memories everytime I open the lid to add something more. Plus, if I just want to look through it again, it's right there in my closet. I hope this helped a bit, and I hope you get as much joy out of doing this for your children as I am for mine. :)