I have a very small house now.
I keep my stash in a chest that my Grandfather made for me that is lined with cedar. I find the smell of the wood does end up in the fibers but that it doesn't last...
I have a few of my larger lots of yarn (bought for a sweater or such) in a large ziplock baggie in that chest.
My knitting needles are 'artistically' displayed in a crystle like vase on my bookshelf in the living room.
And my knitting pattern books are on the bookshelf. The small ones are in a pretty basket beside the books and the loose leaf ones are hole punched and filed by type on the book shelf.
My sewing stash is hung on hangers in the closet. I mention this because I have a friend who uses the empty linen bags from comforters and such (with the zipper) and has punched a hole for a hanger, places the zipper on the bottom and hangs the whole thing in an empty closet.
I like the closet because it is easy to flip through and see what you have and keep it tidy.