There's a 1,000 ways to do it but here is what I personally set up after speaking to a lot of people and attending one of Scott Kelby's Lightroom Tours.
All photos are under one directory, called:
Lightroom. No individual picture files are in that folder though, its only a top level folder for additional folders which are numbered for each year, like 2007 and 2008
So you have:
Lightroom
2007
2008
and under each year there is a sub-folder called Miscelaneous, for just that. Each "shoot" or somhow some kind of logical grouping gets its own folder such as Miami-08 if I was in Miami or so on. the folder name tells me a one or two word description of the event or "shoot" and I put the year at the end of the name so that folder name tells me what or perhaps where and when, at least to the level of which year for the when.
So you might have
LIGHTROOM
2008
MIAMI-08
There is plentyh of metadata associated with each file. I tend to put very broad global metadata on ALL of the picure files and then add more detailed captions and titles, additional key words and more specific lcationn info for only the "keepers"
I have a few favorite themes, such as "Doors and Windows", "Boats" or "Sea-Scapes" and so on. Photos that have a theme or keyword of inerest can be automaticaly included in Smart Folders (on a Mac at least, not sure if smart folders are on PCs? and I can always set up and add in photos to "Collections" for any favorite theme or particular interest that I may have.
So, in the folder labeled Miami, I may have a shot of "Doors & Windows" and a photo of a nice sea scape or of a boat. I can search on Miami or FFL in the locaton fields, search by keyword and have things already keyed up in collections and smart collections. If for some reason I ever need to move the entire body of work, all I need to do is to pick up the top levvel directory which I have called LIGHTROOM".
Based on Mr. Kelby's advice and my own deliberation/study, the photos are all on an external hard drive. Not one to overly trust hardware or my own fat fingers at 1:30 am and so on, the external drive has RAID capability (redundancy) and a backup scheme as well.
I'm not a professional and I don't have a relatively large collection of photos but I kind of think this is a good scheme because I have them sorted on directories by date and by subject and I have all the meta data management options available to me as well. I can tell you that applying metadata is time consuming but I have learned a bunch of ways to do batch processing and to avoid wasted steps while still applying what I think is a lot of metadata. There are people who will apply 10 - 12 or more key words to a photo. For me 2, 3 maybe as many as 4 key words is about as far as it normally goes. That is of course on top of location metadata, captions and titles.
Keywords are selected from a specific list, its called a "controlled vocablary" in library & information science circles, which is where I borrowed some of these concepts from.
What is best for you? I can't say, but having 2 different angles on solving the same general problem seems generally prudent to me.
Enjoy!