Water conservation is a great concept which helps to ease the water shortage and at the same time will lower your utility bill. Different basic approaches are possible:
Collecting water from the roof is most of the time the simplest form especially if you have an existing building with rain gutters - the classical rain barrel.
Today there are a couple of companies out there which offer sophisticated systems. Most of the applications are low-maintenance systems which filter the roof runoff and store the water in tanks (surface or underground). The water can be used for irrigation or flushing toilets (so called "Greywater-Systems").
Greywater systemsuse recycled water (roof run-off, showers, sinks, . . . ) to flush toilets. The system requires secondary plumbing besides the existing. For this reason often it becomes unattractive for homeowners unless a remodel is already taking place (code compliance required).
Recently Sloan started offering a micro system which uses the water from the bathroom sink to flush the toilet. The water is getting filtered and stored in a 5.5 gal tank in the sink cabinet. A small pump fills the toilet tank as required. This is an easy retrofit application for existing homes.
Reducing water use is the best conservation. A simple and cheap solution is the installation of "Low Flow Faucet Aerator" for all sinks and showers in the home. Aerators cost from $3.00 to $20.00. The efficiency is measured in gmp (gallon per minute).
Dual Flush Toilet
Dual flush toilets have been used in Germany since a very long time and are now available in the US. The system allows you to determine how big of a flush you need. A new toilet with tank or often a retrofit of your existing is possible.
Read GreenHomeGuide's low flow toilet tips.
This is a very basic overview of systems or approaches which are available.
A review of the special circumstances of your home is necessary to make a determination what will fit best.