There are so many specialty parts in Lego sets these days. Although there's nothing wrong with throwing them all in the same bucket, there's a good chance your kids won't be able to make the same plane, train or automobile again if parts to different sets get jumbled together. Enter, the Lego Workstation.
The Lego Workstation is a new product that resembles paper craft storage containers you find at big box and craft stores, but this storage system isn't for scrapbooking supplies, it's for Legos!
When it comes right down to it, Lego sets are expensive and your kids might really like to really like to build the complete set more than once. To do so, you can easily use one of these slide out bins to hold the specific pieces for each project. Toss in the instructions in the case as well and you'll be good to go.
Now we can already hear the choir of parents saying, "Just dump them in their own tub to inspire creativity!" and while there's nothing wrong with that, the sadness that comes when you can't find the windshield or specific wheel or specialty part for a set can be quite real. Sure they'll find a way around it, but it's still a cool storage idea nonetheless.
Even if you're not into storing sets together, it's still a great way to store Lego works of art that are still in progress. Each child can keep their pieces they've worked long and hard to sort out in a box. You can find them at ToysRus for around $50.
(Image: ToysRus)

Ercol Bar Stool
this is a great idea and one that i have tried. it only works for my older son who likes to build his legos and then leave it up for awhile. when you have a lego "re-builder" like my youngest son, who builds and builds, this just doesn't work. legos are everywhere and all mixed up and that is how they like it. you can sort and classify all you want and it just gets all tossed about. it's best to just be at peace with the legos for a few years.
Still working on that peace, 'Disheveled.'
These days what is working relatively well for both of us is to keep sets DS has taken apart in separate Ziplocs (with the easy close and open top) and plop those into a canvas bin and all of the instructions in a binder with plastic sleeves. DS still uses parts for his fantastic creations, but there is less frustration looking for ALL of the parts to every model he decides he wants to rebuild.
We also keep a cardboard box without a top (the bottom of Mexican Coke) for the regular Lego bricks and another one for all of the special parts like wheels, little nubbins, etc.
I have a 4-year-old who loves Legos AND rebuilding sets...but also likes to combine...and doesn't have near enough patience to actually keep them separate or sorted.
I've been interested in this: http://www.box4blox.com/ for a while. It seems like it's somewhere in between; it's a series of mesh grids that help quickly sort the bigger pieces from the teeny-tiny ones, so at least you're only sorting through similar-sized pieces. I don't think it's big enough to actually store a moderate-sized collection like we have, but I could see storing them in separate bins, or just sorting when looking for pieces.
It's ridiculously expensive (I think $40?) for the size, but I think it might make my life easier. Has anyone tried it? Or are there other less-expensive products like that out there?
We have a couple of these, which is similar to the one shown here, that we use for both craft and lego storage. For legos, it's pretty easy to separate by sets, if only my son would actually keep the sets separate. I try, but he still mixes up the pieces. But, as for the storage, I love it. You don't have to put the wheels on it either, if you don't want to. I got mine in store at Target and it's a little cheaper than the colorful lego version. I actually prefer the white.
http://www.target.com/Sterilite-7-Drawer-Craft-Cart-White/dp/B000MQ62IG/ref=sr_1_3?ie=UTF8&searchView=grid5&keywords=craft%20storage&fromGsearch=true&sr=1-3&qid=1295050494&rh=&searchRank=target104545&id=Sterilite%207-Drawer%20Craft%20Cart%20White&node=1038576|1287991011&searchSize=90&searchPage=1&searchNodeID=1038576|1287991011&searchBinNameList=subjectbin%2Cprice%2Ctarget_com_primary_color-bin%2Ctarget_com_size-bin%2Ctarget_com_brand-bin&frombrowse=0
When you find a product that will pick the LEGO up and put them in a bin, any bin, let me know. I'll cash in my retirement savings to get it!
@HamiltonDoula: We have the Block-O-Dile! It's designed for duplos but works for most legos...you just kind of run it around the floor and it "eats" (kind of sweeps?) the blocks into the belly. It works sort of like a hokey sweeper. It's not 100% effective, but it does make the kids more excited about cleaning up. I don't know if they sell them anymore, though - we got it on close-out at legoland.
Unfortunately, it still requires man power. And sorting. For a mechanical lego-picker-upper? Yeah, I might cash in my retirement, too!
I am a major Lego fan and have a huge amount from my childhood, I keep them in big fishing tackle boxes, then you can put people in one compartment, trees in another etc etc. Can't wait for my 2 year old to get old enough to play with Lego.
He will become a lego fan if it kills me!
We also store our Lego in tackle boxes, sorted by type of brick (not color). We have major "creative" builders, so they are constantly mixing and matching pieces from different sets, but they can also rebuild sets because they know exactly where each type of brick lives. You can see the system on my blog: http://remarkablydomestic.com/2010/05/11/tackle-lego-chaos-brilliant-lego-storage/
Count me in as another ziploc sorter. But the Lego "briefcases" are quite adorable - I was tempted to buy the one with the mustache for some use besides lego storage!
I'm generally a fan of the giant, giant tub for Lego, though I have come to realize that anything that takes a ton of work and sorting to put something away just isn't going to happen. Little tiny pieces that might get lost get kept in the bags, but everything else gets dumped in at once.
I just did a post on this today - that storage set is cool - I just know we needed a variety of sizes for our LEGOS - some were mine when I was a kid and my kids are C-R-A-Z-Y about them so new sets join the family every birthday and Christmas. http://pennypickles.net/blog/2011/01/17/like-a-13th-century-monk/
Our new set up works for us and we spent less than $100 on the extra storage - go IKEA!