I keep all my files on hard drive, backed up to yet another hard drive. I also keep the cds and dvds in an extensive system organized by tour, cd, dvd, promo, guest sessions--you get the idea. I can grab any disc I want to listen to outside or in the car. And the flac files and video_ts files are there for trading.
I don't trust any single system, so I keep three. I don't convert to mp3, since I can take my player outside and blast it. I live in the country, so all I bother are the cows.