My son is 6

and is the same way. He is a very emotional and sensitive kid and he gets very attached to his things.
Right now, I am selling the old clothes, but not the toys. The clothes I keep in hiding while I am selling them. Since I am using E bay, I really only have time to manage about 2 to 3 items a day so it has been a slow process. But, I have now made 335 dollars in the last two months. This time around, most of that money went for Christmas gifts, but at least it did not go on credit cards. That was a change for me this year and I am proud of it. I plan on putting the money that I make in the next few months on the credit card balances.
When we get to the toys, I am going to start by just putting things up for about a month and see if he misses them. What is missed will come back down, but what isn’t missed (and is not age appropriate anymore) will be sold.
I also heard of someone who is using this concept as a learning point. This person allows his kids to help pick out what is not wanted anymore to sell and then gives the child half of the profit. For a 4 year old, the concept would start teaching the value of money. My kids are 5 and 6 and when they ask for a new toy, I present this idea to them. They can sell off some old toys to have enough money to buy what they want. So far, neither child has had enough interest to do so, but they are getting the idea about how toys cost money.
But, right now, Aidan is begging for a Mario game for the Wii and I presented this idea. He elected instead to wait for his birthday in April. He has about 100 stuffed animals, but cries at the suggestion of giving any away. He really sees them as having feelings and gets upset at the idea that they will miss him and have no one to take care of them. This thing is real for him so I don’t want to diminish his feelings.
Either way was fine for me, but he stopped begging for the Mario and is ready to wait a few months and he now understands that things cost money and we can’t always just get what we want because we want it. If I can teach him that before he becomes an adult, I think I will have done a good job.