When my children were growing up, I was (I confess it!) guilty of having too much clothing and too many toys for them. I would worry about what might happen if we needed that shirt, or if my child suddenly liked the perfectly good toy he/she never played with before, and how I would hate having to go the store for a replacement if I got rid of the one we had.
It was a mistake. Although it's wise to think of future needs, the children's rooms were always a mess, because it's impossible to organize clutter.
Can you and your five-year-old look through the clothes in her closet? Take everything out, and put back only what she needs to have or can't live without (and the "can't live without" must be done very judiciously). If the closet becomes pleasantly full and she (or you) want to add something else, you have to take something out. Don't go over the space you have. You can do you baby's clothing by yourself, of course.
Put "grow-into" or next season's clothes in a box and store it in the basement (or wherever). Give the rest to charity. There are children who will need those clothes, and you really won't miss them.
When it comes to toys, keep out only the toys she plays with. Store the other important ones. Once a month go through the toys in storage; let her pick out three "new" toys if she wishes, and put three "old" ones in storage for a while.
Basically, what's appropriate is what fits comfortably in the room! Small room or large, small closet or large, the limit is what's comfortable in the room and easy to take care of. And it seems that the more comfortable the room is, the more the child is likely to play with the toys. When there are too many, a child will play with fewer and fewer of them... or get absolutely everything out and become overwhelmed when it's put-away time.