Pick up a copy of Ready Made it's all about reusing regular items around the house and using them for other purposes. And i dont' mean simple pencil holders and stuff, i mean furniture; tables, beds and shelves made from old 'crap'.
Chapters carries it but they aren't really good at keeping stock so here's the website:
Do you have double the quantity of many items at home!!?? Besides Charity and Recycling does it seem like you can't get rid of it!! HOW CAN I STORE 5 COMPLETED PUZZLE PICTURES THAT LOOK SO GOOD FINISHED BUT NOT SO GOOD FRAMED!!????? just an example!
Damaged CD's can be repaired, and repair or reuse is definitely a better environmental option than recycling. You have some chance of repairing small numbers of obvious scratches with a mild abrasive such as toothpaste. Work only on the non-label side, with strokes radially out from the center. Professional refinishers such as AuralTech CD Refinishing will repair disks for about $3 each and guarantee the results.
If you just don't like the CD's, give or trade them at a music store or donate them to charity.
Obsolete or unrepairable CD's and cases can be recycled. Recordable CD-R's have about 20mg of gold that can be recovered, and some processors can actually remove the data layer, and reuse the plastic disc. If you are worried about proprietary data, you can cut them with a pair of heavy duty tin shears, or place them in a microwave oven with a small glass of water (for one disc, 5 seconds on medium does a fantastic job, and creates a spectacular light show)
Since CD's are not very valuable, nobody will pay you for recycling.