Much of the advice I would give is already contained in other pieces of advice given. Just a few thoughts though...
1. I personally do not believe in the "paci fairy". To me you are in essence lying to your child. And then we as parents wonder where did our children learn to lie. (this would also go in line with other advice that offers an untruthful way of where the pacis are going). It seems a harmless thing, but depending on how "attached" your child is, if he discovers the truth, he may get very upset.
2. One suggestion not offered up is taking the paci's to Build-A-Bear and actually having them sew the pacis within the bear.
I do think it needs to be the child's choice though. I don't like my DD's paci either, but even when we had her throw them away herself and she knew where they went, she was simply not ready. 2 weeks later we were STILL having extreme sleep issues. (It was taking her 2 hrs to get down at night when it used to be minutes). She had stopped asking for it, she knew where it was, but it was such a habit, that she couldn't do without it. I ultimately caved and bought a new one. She went right back to sleeping like normal. I know that my story is the extreme case, but hearing how attached he is to it, it is not unlikely that he could react the similarly.
After 2 weeks of sleep craziness, I decided it was not worth it and when she is ready, she'll be ready. I bring it up every few weeks, and she still isn't ready to part with it. And frankly, I'm OK with it. Some kids suck their thumb/fingers (and you can't take those away) other kids love their loveys, and stuffies, but if it's a comfort item, I just personally don't think it's worth it. If there was a risk of dental issues that is one thing, but barring that, I don't think it's a big deal.