I solve this problem with photo management software. There's many options from cheap/free & simple ones like Picasa, iPhoto, ACDSee, etc up to the more advanced like Lightroom and Aperture (this is by no means a complete list!).

This type of software allows you to track additional data relating to your photos, both individually and as groups, as well as letting you organise them in multiple different ways.

For example you can give photos star ratings, flag them or apply specific labels/keywords to help you choose, sort or remember the better shots. You can create albums/collections of photos (even from completely different events/shoots/folders) for sharing/publishing in different places, or for a slideshow you might make one day for your mum's 60th birthday, featuring your best photos of her over 10-20 years.

And this avoids any duplication of photos, as tends to be required by software-free folder-hierarchy systems, as well as easily allowing you to make changes from the original file without having to keep duplicates of original & modified (e.g. cropped or straightened) files.