Khushboo, from experience, this is probably going to be a long, arduous task -- the first time around -- but hopefully afterwards you can keep up with it on a regular basis. Anytime we discontinue/change use of a field in SFDC I make sure to update anywhere that the field is used, and then hide it so that nobody uses it accidentally and it doesn't muck up our system.
There isn't an easy way to do the initial cleanup other than what Josh and Rajesh have suggested... my only real suggestion here is to try to keep up with it on a regular basis once you've done the hard job of getting it up to date.