I just caught up with this thread again and realized I never answered Shannon’s original questions (assuming they were directed toward me). Sorry about that!
I’d love to hear exactly how you went about taking all the toys away. Were they there when you took them? Or was it overnight/when they were out with someone?
My kids had been arguing and being very selfish with one another for days and days. I was at my wits’ end, trying to figure out what started the behavior and how to stop it. I spoke to my husband and brought up the idea of taking away all of their things. He agreed that they had not heeded the warnings and corrections we had given them, and that most of their arguments were about who got to play with what, what belonged to whom, etc. We agreed that the next time there was an altercation between them, we would do it afterward. I did wait until evening, when my husband was home so that we presented a united front and I wasn’t the only “bad guy”.
Did they know it was going to happen and exactly why?
Yes, we explained the behaviors and selfishness and told them that they would be losing all of their things since they couldn’t seem to work out disagreements, choose to share, get along, etc. We did it right in front of them and actually made them help.
What did you do with the items you took?
We had a guest room we didn’t use often, so we piled everything in there.
Did you take their bikes also?
Yes. We took everything from them except their clothes, beds, and Bibles. All of their books, stuffed animals, dress-up things, puppets, Legos. Everything.
Was this also a complete ‘no screen’ time for them?
Absolutely! And the screen time was the last thing they got back.
What about art supplies?
Yes. When I say “everything”, I mean EVERYTHING. 
The only options they had for “entertainment” was to play together, without toys, do chores, read the Bible, take a nap, or help me with whatever I was doing. They could go outside and play tag or hide and seek. During this time, we were re-doing part of our fence, so they spent two entire afternoons hammering nails into the old fence pickets. They collected bugs, squashed ants, picked flowers and weeds, played clapping games together, I Spy, and more. If they didn’t want to work and didn’t want to be bored, their only option was to play with each other.
Honestly, I would do it again in a heartbeat. I actually got sad when we started giving toys back. We went on a week-by-week basis. If there had been signs of thankfulness, obedience, generosity, good attitudes, peacefulness, we would allow them to choose a couple of toys to put back in their rooms. Little by little, they earned it all back. Well, all except the things they decided to get rid of/donate/re-gift as they realized they had too much stuff anyway.
Here’s the blog I wrote about the whole process: http://todayindietzville.blogspot.com/2012/05/life-without-toys.html
I hope I’ve answered some questions. And I hope you’ll all read the blog and see that doing something drastic doesn’t mean you’re not being gentle too.