Yeah, I do freelance work alongside my day job and managing the time effectively is something I struggle with on a daily basis. I began freelancing for two reasons: 1) to supplement my income and 2) to learn things that I would never have a chance to learn in my day job. With those two things in mind, here's my answer:
Accepted Projects
I only accept projects that involve technologies that I a) have an interest in or b) have knowledge of. The former is because it satisfies my "learn things" requirement and the latter because it satisfies my "supplement income" requirement. But I do not accept a project just so I can try a technology I'm interested if it's not a good fit for the project. That would be unfair to the client, I think.
I also turn down projects where the client requires me to be available during the day by phone. Although I can take a phone call here and there during the day, my day job comes first so I cannot at all guarantee that I will be available. Unfortunately, this wipes out a significant portion of potential clientelle but that's the price I pay for not diving in to freelance work headlong and making this my full time job.
As far as project scale goes, I don't have any strict requirements. It has more to do with the scale vs. the time allotted. The project can be create a dynamic website with widget a through z. If that has to be done in a year, I'll probably take it (assuming it meets my other requirements). If it has to be done in 3 months, I won't. I will either have to work my ass off not ever seeing my family or I would do a bad job on it. In each case, someone suffers.
Time Management
On top of my work, I also have three kids. A lot of the reason I do this extra work is to help support my family and our chosen lifestyle. The idea of working so much that I can't ever see them really kind of defeats the purpose so I have to keep that in mind as well. When things are really busy and I've got a project that requires all my available time, I structure it this way:
Weekdays: 2 hours/day
Weekends: 8 hours/day (when a deadline is coming up)
Weekends: 2-4 hours/day (when I can take my time)
I will answer simple to answer emails immediately during the day (lunch time, for example) but never spend more than 5 minutes on a reply during that time. Any email responses that require more time than that become part of those hours listed above.
I will take phone calls during the day as long as they are scheduled ahead of time. I do not take impromptu calls - especially when they can just as easily be handled by email (some people have this addiction to phone calls I will never understand).
There are some cases where a freelance job turns out to be tougher than I had predicted. In these rare cases, I will take a day off from work to focus on that. But that's very rare.
Feeling Overloaded
Again, I sympathize. The biggest problem I have here is letting the amount of things I have to do get jumbled around in my head at which point I lose all perspective. At this point, it seems like I have way more work than I actually have or it actually is a lot of work but because it's so jumbled it seems completely unapproachable. Two months ago, I started keeping a daily development diary for each project. I use evernote because I work on multiple computers and it syncs well. This is a free form medium that allows me to track what I've just done and what I've got left to do as I think of it. When I move from project to project, I have a tendency to forget where I left off. It helps with that and it helps me to remember what the hell I was thinking when I decided to do thing A instead of thing B. I actually started to use this for my day job as well and I've found it to be incredibly helpful. But I imagine there are those who can keep this stuff organized in their head just fine thank you very much and don't need anything like that to help them along. I'm a simple man.