I need a little organization help!

First of all, we have a small apartment. In Jacob's room, we have one of those cube storage units (9 cubes) and a bookcase to store his toys/books. We have had all his books on the top two shelves of the bookcase, but he can reach them now and he likes to pull everything down. I'm just wondering how everyone else organizes so he's able to play with everything but easier cleanup. He's received a lot of things as hand-me-downs and we actually don't have room for everything. I have a big tub of things in his closet that I rotate out. We don't have room for much in the living room either. I thought about keeping a basket of toys/books in there, but that's all that would probably fit.

We have the same problem with clothes. Both sides of the family have been giving us clothes for when he's older but not enough room to store things. Jacob is almost 2, but he has complete wardrobes for up to size 12. I do have a lot of room in his closet, so I guess labeled storage containers for each size?