1. Store extra pillows on the very top shelf. This will allows you to use the ceiling height to your advantage, and if a pillow topples down on you, no big deal.
2. Store extra blankets, quilts and comforters on the bottom.
3. Fold your bath towels in thirds instead of halves (follow the same steps, minus the last fold, for hand towels)
4. Fold hooded towels into neat little packages like this
5. Learn how to fold a fitted sheet. There are a ton of great video tutorials on the web so I will refrain from reinventing the wheel. BHG has a great one.
6. Keep your wash cloths in a small basket. You can place this basket in front other linens which allows you to take full advantage of shelf depth without sacrificing accessibility to the item(s) behind.
Trust me, the folding makes a difference :).
Confession: I learned how to properly fold a towel in the last year. To see what our linen closet looked like before, you can sneak a peak here.