I have long abandoned the practice of placing shortcuts on my desktop in favor of a much cleaner look and feel using a keystroke launcher - specifically Launchy. For those who still prefer having their desktop stocked with all their favorites, however, Fences might come in handy to keep the clutter at bay while maintaining icons organized in a consistent fashion.
This free application from Stardock - known for their GUI customization tools and computer games - essentially lets you create semitransparent containers that float on the desktop and labels to organize icons within them. It also offers the option to hide all or some of your desktop icons by double clicking on an empty area. The aesthetics of Fences are nice out of the box and can be highly customized to suit your preferences.
It's a simple concept yet a useful one that will help clean up messy desktops. This handy tool is currently free until August as a preview, and runs on both 32 and 64-bit versions XP, Vista and Windows 7. You can grab your copy here or see more screenshots and videos of Fences in action at the company's website.