Now that I have you surrounded by massive piles, it's time to purge. And yes, you do have to purge. If you had enough room for everything then you wouldn't have had to organize.
I've always called these the purging rules, but they are more like questions you should ask yourself.

1. Is it broken, unusable, or worn-out?After you've "used it up and worn it out", you're supposed to throw it out. We expect our kids to let go of these kinds of beyond-repair items...so we have to set a good example and let go of ours.

2. Do I have enough of this item already.
I have seen some crazy collections of grocery sacks and the like. You need to ask yourself: Will there ever be a situation when I'm going to need 30 empty butter containers?

3. Would I pay a storage fee for this?
On one of the organizing shows, I heard the organizer say that if we are not using our rooms for living space, then our mortgage is just a storage fee. I really liked how thought provoking that was. So if most of your rooms are filled with clutter and are unusable, ask if you would pay a storage fee (as high as your mortgage) for these items.

4. Does this represent who I am today?We are not our possessions.
Our actions represent who we are, not our clutter. Do we hold on to things because we think they represent us-- or once did?

5. Does this invoke happy or sad memories?After my mom's death in '01, we had to clean out her house and decide what to keep. My mother was a collector, so there was plenty to spread around to her nine children and then some.
When choosing which items to take, I realized that if I chose things on the basis of: "I remember this was always on Mama's dresser" or "Mom really loved this" then every time I looked at it, it would remind me that my mother was no longer here to enjoy it.
So instead, I chose things that were pretty, or that would look great amongst my things. So now, when I look at these objects, I am happy. I can think, "Look at this beautiful object....I got it from my mother".
Our loved ones do not wish for us to be sad or to live our lives for them. They want us to be happy, safe, and fulfilled.

6. Does this belong in a different room/space?Sometimes our items just need to be relocated. In one instance, I was organizing an entry-way closet for a neighbor, and it was filled with heavy coats during the summer. She realized that these heavy coats could live in the garage during the summer to make room for the lighter jackets that were sometimes necessary.

7. Am I keeping this just because it was a gift?
Nobody gives us a gift with the intent of it cluttering up our lives. If they do become offended, it is usually short-lived. Your health and well-being and the running of your home should not be hindered by guilt.

8. Will I finish this project? How long has it been unfinished?
I love it when Dr. Phil says that the best indicator of future behavior is past behavior. If we have not finished it, it was not a priority, and will never be finished.

9. Have I used or looked for this recently?
Do not get me wrong. I do not believe in generalized organizing ideals....I do NOT want you to put something in a box and leave it closed, and then if you haven't opened it in a year, throw it out. DON'T DO IT. This will only make you wonder what was in the box, and hold on to your possessions even tighter.
I want you to consciously look at everything you have and make a desicion about whether or not it is something that you need in your life.

10. Would I display this?Another thing I take away from these organizing shows that I love to watch (and judge), is that if you have a collection, it should be displayed.
If it is hidden, in a pile, or in a box, then we are not proud of it and it is clutter.
"Hello, welcome to my home. Would you like to see my lovely collection of cardboard boxes?"

11. Is this replaceable?
I have to say that this one is one of my favorites. As I was contemplating teaching this lesson for the first time, I had an epiphany.
Let's say that you have some popsicle sticks. You have kept them for 10 years thinking, "I might need these. I might be asked to be a Den Mother. My kids might need them for a school project."
Then let's say that after 10 years, you make the decision to throw them out. You haven't needed them and they are just clutter. Now we all know what is going to happen the very next day. You will need them for something.
The epiphany is this: how long will you mourn and kick yourself before you go out and replace the item? maybe 10 minutes. So consider that 10 minutes and balance it against the 10 years that you held on to something that was useless, that you had to keep in mind (in case someone asked for it), and that was a waste of space.
So what is worth more? Your brain space, your peace of mind? or the two dollars you will have to spend to replace something you didn't need for 10 years.

12. Could someone else benefit from this?Why hold on to baby clothes for a baby that might be a different sex, or a born in a different season of the year, or will be born so many years later that the clothes are out of style...when there are more mothers who could benefit from free clothes that didn't come out of their budget. There are many things that we have, and don't use, that could bless someone else's life. And believe me, the joy that you will get from sharing far outweighs the loss of something you never used.

13. Is this holding me back?Sometimes we hold on to things and become stuck in a memory or time frame (when our children were babies, when we were happy in high school, when our parents were alive etc). In order to move forward with our lives, we have to let them go. You will not be giving away the memory, just the item.
I hope these help. There are more, but they are more specific. These will cover most of your clutter. I do not want you to clear out your house. I want you to make your house a comfortable place where you can find peace.

The need and drive to hold onto things usually comes down to the feeling that somehow "this is special". I've heard this lesson echoed in many movies, TV, and books that I want you to apply to your possessions: When everything is special, nothing is.