I'm at about 2,000CDs
I'm with VegasE and ThomasE - making all those playlists is like reinventing what's already there - plus then you still have to find the dosh gone playlist...
One wrinkle I have added is I use grouping to create another kind of category - instruments. So if I type Jazz sax I will get everything that features a sax player (so I would use this for a Ben Webster album)
I have also created a couple of new genres - especially Alt Country which has all the EmmyLou but also the Byrds and Gram Parsons etc
Having made an initial sort, I can either alpha the artist or album and pick one; or create a playlist for my iPod and Airport, or just hit shuffle and play that feel until I want something else.
BTW my Playlists are pretty much "feels" or "grooves" -"All Over Blues", "Island Music", "Morning Music", "Duke and Frenz", "Taj and KebMo". I guess you could say I am creating radio stations...
There is some fun mix software out there, plus of course the Apple Genius feature but I find that my library is too big and tends to crash them. I've had the best luck with MusicIP mixer.
Pandora is also a pretty fun way to play with some new music.