Back when I used a film camera I used to organize my photos in chronological order in photos boxes and kept my negatives in binders. When I switched over to digital back in 2003 I had to find a good way to sort and deal with all of the digital photo files I now had. 
My system has evolved a bit over time, but here it is in a nutshell. On my hard drive I have a folder for every year. Under every year I have a folder for every month and then every activity within that month. I then put my pictures within that activity folder. For the example below I went to Zingermans for dinner in March so those photos are in 2012/March 2012/Zingermans.
That system works well for basic things that happen in a month, but it is insufficient for the photos I take on a trip. On a vacation it is not uncommon for me to snap over a hundred photos in a day and when you multiply that by a week or two it ends up being a lot of photos. To organize trip photos I make a trip folder under the month that the trip occurred and then make sub-folders for each day of the trip with the place that I was on that day. For each day I then make another set of folders about the specific activities/places I saw on that day and then number the folders in order of when I did them on that day. So for the example below, the third thing that I did on March 18 in Rome on my Italy trip was visit St. Peter's Square so those pictures are in 2012/March 2012/Italy Trip/March 18 Rome/03 St Peters Square. Having the sub-folders for each activity on a day is great so that I don't have to try and remember a few years later where a particular photo was taken.
The two exceptions that I have to this system are that I keep the pictures that I take of blog projects in a separate area (but similarly structured) and I keep pictures of my house in folders sorted by room. Overall, I have used my system for a while and it works really well for me to be able to quickly find any photo I am looking for.
How do you organize your digital photo files? What system do you use to easily find photos?