This is a case where technology can be your friend. If you scan your photos, when you import them into your computer the organizing possibilities are limitless. The same photo can go into multiple albums. A photo of Cousin Ryan at the Coliseum can go into albums for Summer Vacations, Italy, Family, Ryan, etc. And sharing them with friends is easy and free by posting them on-line or emailing them.
You may be tempted to balk at paying for scanning but ask yourself how much you spent developing all those pictures in the first place. It is wasted money if you can't find the photo you want. And scanning them on a home scanner would take a lifetime.
The service I like for photo scanning is scanmyphotos.com. They have a pre-paid box that holds about 2,000 photos. Just put them in size order and in no time at all the pile above will be reduced to a single CD.
For slides I had great results ScanCafe.
When you get your order back, hard as it may seem, toss the originals. And then enjoy your new free space.