Now that our 3-year-old daughter has started preschool we are bombarded with artwork. Plus since she's doing so much art at school, she's doing more than ever at home. What to do, where to put it, what to save, what to toss.
For the most part we display her art around the house at her level. We've done that for years. I believe it's the only way to truly appreicate her artwork.
When we started doing arts and crafts when she was barely a year old, I saved almost everything she did. It was amazing to see her "create." I saved those pieces in a plastic scrapbook container. Some of my favoites or her "firsts"(first coloring, first painting, etc), I laminated before putting away. Now I try to take a good sampling of different type of art she has done. If it is different than something else she has made, I save it. I also make sure to date everything.
Because I just can't save it all, I do take a lot of pictures of her artwork. I haven't printed them, but plan to save them digitally with her other photos that will give to her someday. It's a nice way to show her progress.