I use Beth Newingham's system. It took awhile, but worth it. Problem is, I haven't had time to level any new books I've gotten (I shop constantly), but I have a fairly good idea of what level the easier books are.
As for what I do with my kiddos. I have a very low group this year, who are under the watchful eye of my principal and literacy coach, so I have to be very mindful about what I do.
I have never done this before, but felt like I had to this year. For their book boxes, I am the one that fills them with books at/below their level. I put plenty in there, with a variety of genres/topics. I also have them sign a sheet letting me know when they need new books.
I feel badly, because I am a true believer in choice. To counteract this, when they come in in the morning, when I am taking attendance, etc. I allow them to 'read' ANY book they want. It does not have to be at their level. That way, they do get some choice, and because it really isn't for a very long time (10 min.), I don't worry. They get the best of both worlds, I hope! I have to hand it to them, they have never complained about my system.
With my above grade level readers, I moved towards letting them choose their own books. I do check in with them, however. They seem to know how to choose books at their level because they are already 'into' reading....they love it. Unlike my low kids who haven't caught the reading bug because it is a hard skill for them.
I had all of my books separated by GR level in individual baskets. No matter how many times I went over and over where the books go, every week I'd end up redoing my library. So instead, I kept the leveled stickers on all the books and just put them all on the shelf. It actually looks much cozier because I have a wooden bookshelf they're on. The only baskets I have are one for chapter books, one for class books we've written, and one for books the students have written themselves. I have a floor lamp and a candle on a warmer on the top of the shelf, rugs and pillows everywhere. The kids love it and they can still pick books at their level. But even if they don't and they're just making up the story as they go, at least they're showing interest in books!!
I tried having a leveled library, but I didn't like it. So now I sort it by theme/topic/genre. I teach my kids how to pick out a just right book at the beginning of the year so that they know how to choose books on their own - just like they do for school library. We do a lot of activities at the beginning of the year where they are required to find a just right book and complete an activity. I look to see that they really chose an appropriate book, if not then I work with that student. I just don't like the idea of students becoming dependent on a sticker to tell them what book they can read. I think it limits them and some kids feel embarassed going to the lower level books, or take a book that's too hard so they 'blend in' with thier peers. I seperate my books by things like holiday books, fairy tales, math, space, comic/graphic novels/joke books, how-to/instructional, people/biographies, Shel Silverstein, Rold Dahl, Avi, mysteries, Magic Tree House, Goosebumps, sports...
Now before anyone gets upset with me - I don't think there is anything wrong with leveling libraries, I know it works great for some teachers - It just doesn't work for me and how I teach (Plus it saves me a ton of time )
When I first set up my library, I used Scholastic's Book Wizard - on their website. I labeled every book with DRA, AR... so I could change it if I ever switched schools. (Ambious first year ) I would recommend using it if you decided to level!
Mine are leveled by genres. Then each book within that tub is leveled by phontas and phinnell. They are super easy for me to find what I am looking for.
I have bins with all my books that have an AR test separated by level. I also have a nonfiction shelf that I have separated by subject. I have special bins for Junie B. Jones, Magic School Bus, Cam Jansen, poetry, etc...