The first step in cataloging your digital images is to make sure you're working with only the photos that you want to keep. One of the best things about a digital camera is that you're free to take as many shots as you want without having to worry about the cost of developing film. While you're taking photos at your child's birthday party, for example, you can shoot as many photos as your memory card will hold and sort them out later. What that means, though, is that you'll have a large number of photos that might not be the best quality or are duplicates of other pictures. When you've put all your photos on your computer or external hard drive, it's time to sort through them and get rid of the photos you don't want.
Once you have the shots you want you can begin naming them. Use names that are as specific as possible so you can find the photo you want right away. Most online photo service like Photobucket, Shutterfly or Flickr will also allow you to add keywords to your photos. Keywords are simple, often one-word descriptions associated with particular shots. So, if there is a picture of you with your grandfather, you would label the file with the "grandpa" keyword. That way, when you're searching for photos of your grandfather you can simply do a search for all files with "grandpa" as a keyword. Then, presto, all those photos would appear.
After you've named your photos and applied keywords, it's time to begin grouping the images by theme. Consider using date ranges or grouping by event. The last step, and perhaps the most fun, is to share your photos with your friends and family. There are several ways to go about getting your photos out there. You can burn your albums to a disk or upload your photos to an online album or a social networking site and invite your friends to view your pictures.
Remember, great pictures are only great when you're able to find and share them.