I think the photo albums of the past are just that these days - from the past. I no longer want to cart along hefty albums full of pictures that sometimes fall out. Instead, every year I organize my iPhoto library and make a book of my favorite pictures of the year. I just use the iPhoto Book maker that comes with the program but there are a ton of other options out there as well, notably MyPublisher and Blurb. I am just lazy and went with what was easiest for me.
At some point I also want to make a book of my kid's art - when there is enough to document. Sometimes I scan the art but since their art is very 3-D still I mostly take a photo of it and drag it into its own iPhoto folder for safe keeping. There is a lovely site called Petite Picasso that I may try out once the time comes.