I listened to Inbox Zero, a presentation by Merlin Mann about managing email and your inbox. I was pleased to discover that I've already been doing on my own much of what he suggests.
I don't use any filtering or automatic filing mechanisms on my mail, except for Thunderbird's junk mail filter. All my mail comes into my inbox, and I read all of it. I have made very conscientious decisions over the years about the mailing lists to which I subscribe, and what sorts of things I want to receive by email. I'm only on a few mailing lists, all of them with low to moderate traffic volumes. It's relatively easy for me to stay abreast of mailing list traffic because I specifically subscribe only to those lists on which I know I will participate. (I use the same discipline when subscribing to news feeds: I only subscribe to those feeds which I know I'll read regularly.)
I deal with most of my mail as soon as I receive it. I try to keep less then 30 items in my inbox, although I generally feel uncomfortable if I have more than a dozen items. I've only just recently started deleting email -- I used to keep every single email I ever received. My rationale for keeping all mail was that I could refer back to it later, if I needed it. After some careful self-reflection, I've learned that I don't often refer back to previous email. So where I would keep all SVN commit emails before, I now delete them after reading: they're archived elsewhere, so I don't need to keep a duplicate copy of them.
I do still keep a copy of most mailing list messages, as well as personal email directed to me. Merlin Mann suggests having a single "archive" folder, into which you dump all your saved messages. He specifically recommends against getting bogged down in taxonomy and classification minutia when saving emails. I don't use a single archive folder, but I also don't get bogged down in classification and labeling. I have a "Ham" folder, for all personal emails. I have one folder for each mailing list, so that I can easily go through that list's mail history if I need to refer to a previous message (this is usually faster than searching the lists' online archives). I have folders for online shopping receipts, feedback from my website, and a couple of primary vendors (my ISP, my VPS provider, PayPal). I have one folder for email from each of my daughters, and one for email from my wife. In all, I have 23 folders. When I'm done with an email message, I drag it to its final destination, and leave it there.
At work, I break things down a little more. I create a folder for each person in my department, so that I can easily see my correspondence with them. I have a folder for each of the vendors with which I interact. I've found it very helpful to have this level of organization, but it doesn't get me bogged down trying to figure out where to file something. For departmental contacts and vendors, I do often review back to previous discussions, so having their messages grouped in a folder makes such review fast and easy. For email from folks around OSU, I store them all in a single "OSU" folder, since I only infrequently need to review past discussion. At these times, I find it acceptable to simply search for (or sort by) the sender's name within the folder.
One analogy that I've found particularly helpful as I learned to deal with ever increasing volumes of email was to think of my email program as a physical desk. I only have so much room on the top of the desk, so I should prioritize what items remain there. I leave items on the top of my desk if they need my attention. In the same way, the items that I leave in my inbox are those that need my attention: either a lengthy, thoughtful reply, or some other action is required by them. I don't keep old memos or notes on my desk at work: I file them (sometimes in the circular file). Likewise, I don't keep old email messages in my inbox: I file them. I can access them if I need them; but they don't overwhelm me or get in my way as I deal with current issues.
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