I have one of those rooms filled to the roof with stuff. If I were to start over again or had just a small space for stuff, this is what I would do:
Use the space you have for tool storage - punches, adhesive, scissors, trimmers, Crop A Dile, Bind it All, that kind of thing.
I'd buy one Universal diecut machine so then I could have my pick of using all the different dies on the market. I recommend Big Shot, Creatopia by Xyron, or Tim Holtz Vagabond (electric). I'd also buy an electronic machine, like a Silhouette or Pazzles that does not use cartridges (you have to store all those cartridges) so you can cut fonts and don't have to buy a huge stick of alpha stickers.
I'd never buy another Collection Pack or pad of paper --it is way more than you will ever use of the same thing over and over. Buy the paper as you need it. There is new stuff coming out every 3 months and most people have a built a stash by buying stuff they won't use in the 3 months and then buying newer stuff to use instead of it. Just buy 1-2 sheets of a paper to use for projects you already have photos for.
If you must have stamps, buy acrylic ones -- they are much flatter. Instead of a pack of blocks, I recommend 1-2 small blocks (3" of smaller) and then the Fiskars Stamp Press--everything fits on it and it stores flat.
Same with embellies--only buy what you know you will use in the next 3 months.
I'd get a smattering of Copic markers (Basic rainbow plus black, grey, and brown), a pack os Smooch Sprtitz or other spray ink in assorted colors, a couple queues of Cat's Eye ink pads (stack and are small, easy to store), and a small bottle each of white, brown, and black paint. Clears embossing ink pad with clear embossing powder and a heat gun. That's all the wet media I would buy.
Neutrals -- keep a stock of neutral colored items on hand -- they take up very little space and you can always use markers or ink to color them. Spray ribbon or lace with Smooch Spritz or spray ink to change the color. Color buttons, brads, and shiny stickers with Copic Markers. Ink matte stickers and delicate lace with Chalk Cat's Eyes. Bella Blvd's new Sophisticates line has a great sheet with 4 alphas on it that retails for about $3-4 I think -- they have one that is brown and cream and one that is black and white--you can ink those cream and white letters to any color! Buy brads in silver, white, black, and copper, a good set of neutrals that are always in style.
Cardstock -- buy this in pads if you can. I like the American Crafts ones -- they come in a box that is handy for storage in a variety of different colors. I have one friend who never uses cardstock to scrap--this saves her alot of space! I can't part with mine--love to diecut with it.
Store everything you can in a rolling crop bag. If thebag gets too full, you can scrap some to use up some of the contents. If you fill a room with stuff, you can scrap for 8 months without every buying a piece of patterned paper and not even make a dent in it (I know because I am doing that right now). With all the money you will save you can go on retreats, take some classes, and go on vacation with family and friends!! (to get more photos to scrap of course)
Hope that helps! You are making me wanna clean out my room!!