How do YOU organize your digital photos?

I'm putting out a call to all my blogging and picture-taking friends (and friends of friends):

How do you organize your digital photos? I've been thinking about this for some time now, and decided I should find a better a system while I have only a few thousand photos (almost 5,000) instead of a million. :)

Currently, my photos are basically just organized chronologically, with a folder for each month. But, I don't remember what exciting events happen each month, or even in which month an exciting event happened. We have a Mac, so I use iPhoto (I used Picasa on our old PC, which I also really liked). iPhoto (are you supposed to capitalize the "i" if it's at the beginning of a sentence? Look how Apple has affected our grammar...) automatically creates "events," which can be helpful in some cases. For example, I could have an event titled "Genna's birthday" or "Day at the zoo," which is clearly more descriptive than "May 2007."

But what about random, everyday pictures that are not part of an event? I don't want to create a new event (or folder) every time Genna gets a new outfit or I make a beautiful meal. I can also create labels or keywords for the photos which are searchable, but I guess I haven't yet figured out an efficient way without creating too many labels.

Do you have a separate folder for each person? Do you use labels, and what categories do you use? ("Family" or "Mom" and "Dad," etc.) How do you find the best photos? And what about pictures with more than one person in them? What program do you use?

So, what do you do? Maybe you just throw all your photos into "My Pictures" and never look at them again. If so, perhaps you will get an idea or two from some other comments. :) Please share your tips (Mac and PC alike) for organizing your digital photos. I can't wait to hear all your brilliant ideas.

P.S. Should we have a contest? Maybe the person with the most digital photos should win something! I'll think about some kind of awesome prize, and get back to you. Thanks for sharing!