A tip I read a while ago:

1. Lay the fitted sheet upside down on your bed.
2. Make sure all the stretchy stuff lies on top of the fitted sheet. You don't want it hanging off the side.
3. Put your hands under the stretchy stuff and push out all four corners, so you've got a nice rectangle.
4. Take two of the corners and fold them onto the other two corners.

Now all the stretchy stuff should be neatly contained in the fitted sheet and you can just continue folding until it has the size you want.