That helps with organization, but it doesn't help with protection. There are two common ways documents are damaged. Fire damage and water damage. Usually if there is a fire than water damage also occurs. Many theives also target documents now for financial or personal information. For my home documents I bought a few of these.

http://www.sentrysafe.com/Series.asp?r=25

I bolted them to the floor of my office closet (making sure to use a high temp sealant on the bolts) and put a steel door with a good lock on the closet's entrance. Combined with a good alarm system I feel my documents are well protected against destruction or disappearance. Besides that I have copies at a different location as a backup. I keep some stuff digital, but I like keeping paper copies.