I wrote a bit about it over at christynelson.net and if you'd like the specific details on how I fold the fabric or my color inspirations, I suggest you go and read that post.
My Clutter Diet has really been beneficial-when I work on it! I can't wait until my craft room is finished (again) so I can show it off!
When I first organized my craft room I only had enough fabric to fill less than 1/2 of a cube. As you can see, my priorities have shifted. Less yarn. More fabric. More general craziness.
I'm going to be clearing out my stamps next so keep an eye out. I'm going to sell my retired stamps in the next few days.