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all lids go into drawer beneath the oven.

That's the law in our house.

Same as David.
Drawer under the oven with the baking sheets.

All our lids are kept on top of the pot they belong to. We're lucky enough to (currently) have enough storage space so that pots don't have to stack, so they can each sit on a shelf with the corresponding lid.

The pans without lids and the one giant lid live in the drawer beneath the oven, kind of all jumbled up.

This will all change in one week when we move into a new kitchen. I have no idea how things will work there. I suspect my husband would not take lightly to stacking the pots and pans, since they are his from before we got married and pricey (though I have a strong dislike for the set) and, in his opinion, perfect.

I've got a set of pots whose lids can be stored upside down on top of the corresponding pot, allowing for stacking.

I have one of those tall pyramid-shape pot racks that stands in a corner (or, in our kitchen, next to the wine rack). The lids are stored upside-down on the corresponding pot and then they all stack. I can usually fit 2 pots per "section" of the standing pot rack.

Some of our pans and skillets have lids that fit, too. We slide the pan handle through the lid handle and hang the whole unit on the hanging pot rack hook. Standing on a chair to get lids off the top of the pot rack would drive me insane.

I have a vertical lid organizer (the organizer is horizontal, lays on the shelf of my island, holds the lids vertically) that NEVER EVER EVER holds the lids properly. I've had it for 5 years, every time I put away lids, I have to reorganize the whole thing, and every time I say I'm going to find a better solution.

I stack the pots in the lower-level cupboard, and (semi)neatly stack the lids next to it.

Lids get nested within each other and hang out in our giant salad bowl. I don't know if it's the best idea, but it's what we have room for.

Mine are on top of the pot rack, but it's not a hanging one like Sara Kate's--it's kind of a flat bar that comes out from the wall a bit, with hooks hanging down. The lids go flat against the wall, slid down behind the bar until their handles hold them there.

i do the same thing as mandarinmarie. like i said, it's been that way in every restaurant i've ever worked in. small lids go on the pot handles.
http://picasaweb.google.com/dfornear/February09?pli=1&gsessionid=G5d97QGdyNs6OqNqALjZtw#5328367202083685634

I stack my pots in the lower level cupboards of my kitchen. Inside of these cupboards, there is a small ikea-lack-type shelf that sits slightly below the tops of the cabinets. That's where I stack my lids, in two stacks. I've never seen a cabinet designed like this before, so I suspect that my cool landlord designed them for this purpose. But you could probably literally place an ikea shelf in your own cupboards.

i use the storage drawer under my oven. its there for a reason!

Attached to the handles... similar to what was mentioned above... shown here: http://www.apartmenttherapy.com/uimages/boston/undersink.jpg

My pots are on a hanging pot rack. The lids slide on to their handles. The ones without long handles are all over the kitchen.

i wasn't aware one could organize pot lids

so yeah i think you know my answer

I stack my pots and pans on top of each other widest on bottom... and I have one really big pot on the side in which I keep the lids, smallest on the bottom and biggest on top. I don't have THAT many pots and pans so they all fit in the drawer underneath my oven with my cookie sheets.

Mine go in an old dish drainer in a lower cupboard, stacked vertically like plates. My mom has the same stove as me (no drawer under the oven), and she stores her lids in the crevice between the back of the stove and the wall, with the handles facing out. The handles keep the lids from falling down behind the stove. I *really* like her solution, and since we have the same stove, I'm going to try storing the lids I use all the time in the same way.

I have a hanging pot rack with a place for lids on the top but I can't reach the top of the rack-- if I hung the pot rack lower I would hit my head against the pots as I cook. So I hung a metal chain from the back of the rack, put several S shaped hooks on it and hang the pots down the chain. It works perfectly and keeps them all together, next to the pots and next to the stove.