It really does depend on what sort of work you have to put in there. Either of the options you proposed are totally valid. The one suggestion I hold to is to make sure the first project and the last project are some of your strongest work. Perhaps the best thing to do would be to print yourself a representative image from each project and just keep rearranging until you find the way they work best together?

Many friends at top tier schools tell me that each of their classmates portfolio is unique. That there is no similiarities in content and style.  

Thanks for the tips... I know this is something I need to figure out for myself, but I didn't know if there were certain arrangements that were generally expected by the people who look through these.  I'm having a hard time turning all these different works into one cohesive unit, but maybe I can add a few more in for the purpose of tying it in together. Back to the drawing board...

Thanks again.

@sandhilldesign

If you were to give a dozen people the content and photos of the front page of the New York Times, you'd end up with 12 unique front page designs.

You need to develop a hierarchy that will be the basis of your organization— the best hierarchies follow the "who," "what," where," when," and "why." Avoid "why" at all costs. Telling a story is almost entirely a "why" exercise; it is always contrived and very difficult to convince the reader of its logic. The same goes for "who" since the "who" in question is you.

You're left with "what," when," and "where."

Obviously, "what" can be organized into specific types— group your project types within individual sections.

"When" is chronological, arrange your work by dates. Now, this may be confusing— you can order your projects by date started or date completed. You may have a project that you dreamed up many years ago but just finally got around to completing; you'll have to make that call of where it fits chronologically.

And, lastly, we have "where." You could arrange your project types by their intended locations or locational-types— urban, subruban and rural or Americas, Europe, Asia and Africa. This presents a challenge but if your work contains certain kinds of intended locations, it presents a narrative that you're constantly thinking about site and setting.

Now that you have all of that "logical nonsense," You may chose to ignore it altogether and go for "which looks the coolest and or prettiest."

@ J.James R.

That there is no similiarities in content and style.  

This Archinect Feature may help:

Composing the Personal Narrative Archinect's Official Portfolio Guide Part I: The Academic Portfolio

Try to think out of the box. When some entity receives portfolios you can imagine that around 99% are all the same. Some booklets showing project by project. After watching 10 or 20 you are tired and bored. Try not to thinking only in the information that you see but how you see it. Try to present something different then a book, something that that could interact with the person, with the hands, fingers, etc. The more you distinct yourself from the 99% the better. If you think your idea is stupid you are probably in the good way...

I highly recommend against doing it chronologically. Chances are your best works are your latest and if you start off with them the admission board's interest will peak immediately and then gradually decline. Pace out your projects so that you maintain the admission board's interest throughout the whole thing.  

a portfolio is suppose to say "wow!! now this is the guy we want here!!" if it can't say that, then you have a problem.

get creative and start to think for yourself!  or else you'll get eaten alive in architecture school xD

could arrange it according to project type - architecture, paintings, sculptures, installations,

according to year, themes, etc

Great ideas in here - thanks!  I guess I just have to take a deep breath and make some bold decisions.  I agree that reading portfolios would be similar to reading resumes all day long (something I used to do a while ago).  After a while you start to notice patterns in each one, and even though they each are different in small ways, many of them blended together.  The ones that jumped out were few and far between, but those were the ones that took really brave chances (for better or worse).