All of my pop/rock and celtic CDs are now in FLAC format on the music server, but I still need to rip the blues and classical.
I have about 500 CDs out in one of those dowel-rack holders, the other 800(? lost count) in the closet. The rack is now mostly for show now that I replaced my portable CD player with a Zen Xtra, but I do still play a CD in my DVD player now and then.
For the rack, I've started moving some of them (pairs by the same artist) into 2-CD jewel cases (cheap at rima.com) so I can keep more close to hand. The 2-CD jewel cases are nice because you can move the spine label / back cover insert from one of the two, which you can't do with the slim jewel cases.
I've heard horror stories about binders scratching CDs, which musn't happen to my preciousss music collection.