I wouldn't delete any of it personally unless memory is an issue (Don't get Lee started on wav's
It's important to categorise the music in a fashion it gets rid of the clutter and the deadwood without limiting yourself to the same old songs. Nobody else will be using your collection so it's all about how YOU view the music.
For me personally I have folders such as
70s - Generally stuff I wouldn't play but if I had a 50-60th birthday party I would be able to duck in and choose.
70s popular Generally tracks that would be suitable for weddings
70s rock Songs that I class as rock but maybe off the beaten path a bit (or ones worth exploring if rock/70s is working well)
In other years such as the 90s you had dance, indie/britpop and of course some genres as Motown aren't classed to me by year of release.
I find this way I can find the mainstream stuff pretty easily without having to go through loads of dross but the dross sometimes is what works...