In my head =D
At first I used one password for everything.
Then two, but that was a accident (ie: I forgot to change one default auto-password but got so used to it that I started to use in other places).
Then the first one was cracked.
I changed passwords in lots of places, and started to use 3 passwords total.
As this kept balooning, I decided to instead create rules for my passwords (rules that only make sense to me, of course, they are totally arbitrary and almost random).
The result is that I have now about 20 different passwords, but I can remember them all with enough effort. Sometimes there are a random site that I don't used in a while that I cannot login at first, but as I try several of the possible variations of my rules, eventually it work (erm... or not :P this had happened a couple times already, and I needed a password reset).
My associate use lastpass.