There are lots of ways of storing paper citations (you could even -shock horror- use paper) - the most established format is called BibTex. Essentially this is a database store of paper citations.
JabRef is a free and Open Source tool for storing papers (using BibTex). Since it is free you can easily download it and have a go. Download it from the JabRef home page
The rest of this page gives some help on using JabRef:
Install and run the program... It doesn’t do much until you import some papers - to do this you just need to save the paper citations to BibTex (or other compatible format) and import/open them:
If this doesn’t work, look at the JabRefImportList for more help.
To do this you need to ensure that the articles have a unique BibTex key and an Author, the import will throw an exception otherwise.
To import to CiteULike from JabRef:
Job Done. Note – at the moment the article keywords are imported into CiteULike as tags. This kind of bodges up the tags, since keywords are generally vague and useless. To resurrect this, you currently have to go into each article and delete the tags/add appropriate ones. THIS IS IMPORTANT to maintain the integrity/usefulness of the tags in CiteULike.
CiteULike has an export to BibTex option - at the moment, this only exports your whole library, but hopefully this will change in the future.
— Simon Judge 2006/01/16