Bibliographies for small projects are easy. For large projects (e.g., a dissertation) they are complicated, time-consuming, or both. That's why you should use a bibliography manager.
There are several very good bib-managers out there. Zotero is free, flexible, and has really great features; Papers is swanky looking, and I'll discuss BibDesk below. Just stay away from EndNote.
I started using BibDesk years ago, because I wrote in LaTeX, which BibDesk is designed for. I still use BibDesk because I like the fact that it stores bibliographical information in plain texts file (no fancy database). It is still great for LaTeX, and it has a slew of more modern features like auto-filing PDFs according to bibliographic criteria and automatically searching public/private databases like the Library of Congress or JSTOR. With the help of PANDOC, BibDesk even works seamlessly with Word documents. Its one weakness is that there is only minimal support for BibTex on mobile devices, although there is enough to get by. (BibTex is the format the text database is kept in). BibDesk is open-source and insanely powerful if you want to dig in.
For someone starting a bibliographic database today, working in Word only, and indifferent to all the feature above, I'd recommend Zotero. But read below, because you may like to emulate some of the features of BibDesk's features.
The basic BibDesk window looks like this. All biography managers basically look like this:
One the left, you can see smart and static groups. The static groups (in this case), have papers I intend to read on Spinoza, Hobbes and Descartes. The smart group updates in real time and contains all entries with Newton in the title that have been published after 1990. The External group contains entries to external databases (like JSTOR), and you can add you own. In the middle, you can see some of the contents of the smart group, as well as the PDF of the second entry.
I religiously add bibliographical information for anything I read and don't immediately decide is useless to me. The entire library has 1872 entries, about 60% of which has associated PDFs/Word documents/text files/etc. (indicates by a paperclip in the middle panel). Searching for papers is as you expect: there is a search bar that makes finding any PDFs (etc.) a breeze.
If you have installed LaTeX, you can easily switch the view to see the fully formatted entry, for cutting and pasting.
The data entry window is simple:
The dropdown indicates the type of entry (book, article, edited volume, etc.) You can insert notes under the Annote and Abtract tabs. If you want to share your library by RSS (cool, right), the shared description goes in the right-most tab. The rest is pretty self-explanatory.
Note that I've added a field called "Type". It has two values, "Primary" and "Secondary". I use it to indicate whether an entry is, well, a primary or secondary source. You'll see why in a second.
When you drop files on the space occupied by the PDF, BibDesk will either link the file to the entry copy the file to a specified directory. I use BibDesk to file all my PDFs according first according to type and then according to author. That means all primary sources (if I entered "Primary" in the "Type" field) are grouped together, then separated into folders that correspond to the author(s). BibDesk will rename the file too, according to the scheme of you choice. I use the author, first 5 words of the title, and the year.
To emulate this, enter the following information in BibDesk "autofile" preferences, modifying the base directory to you needs. PDFs will then be files and named automatically. The "Format String" determines where and how items are renamed, you can easily modify it.
There are many more features to explore here. I haven't even mentioned how to use the main one, i.e., how to use BibDesk to make a citation. If you work in Latex, you can figure this out easily enough. If you don't, that will have to wait until I discuss PANDOC.