I have two kids who are under the age of 3.  We have accumulated way too many toys over the past 3 years all thanks to the grandparents.  Ok, and we have a tendency to buy useless knick knacks for them too, they are KIDS!

I have a rule (for myself).  If it’s something really cheap and something that is collecting dust, then it’s thrown away.  (I’m not terrible, if it’s in good condition I’ll give it to Goodwill.) 
One of my kids loves to play dress-up, if I find a broken necklace that’s in the trash ASAP.

We also make lots of things around our house, so old projects are thrown out after a few weeks.  I keep all of the art projects from school in a box in their closets though.  Those are off limits.

Now onto those toys I can’t possibly throw away.  My youngest is given the hand-me-downs.  She needs to experience the same joy that the Oldest did, right?  I’m lucky not to have to buy a bunch of new toys and she doesn’t know the difference.  My advice to any parents with one kid would be to keep EVERYTHING.  Once the second or the third comes around, you won’t need to go buy another Elmo Computer.  And then, if they are still "usable", give them to Goodwill.