Hi Bhaskar gothrough this once..

Navigate to the fields page for your object. For example, for account fields, click Your Name |Setup | Customize | Accounts | Fields.

For custom objects, click Your Name | Setup | Create | Objects, then click the name of an object.

For Knowledge validation status picklists, click Your Name | Setup | Customize | Knowledge |Validation Statuses.

In the Custom Fields & Relationships related list, click the name of the picklist field you want to update.
In the Picklist Values section, click Edit next to a value.
In the Picklist Edit page, you can change the name of the value and make the value the default for the master picklist. You can also assign a color for use in charts by clicking the  [button for the chart color picker]  button. To assign a color dynamically when a chart is generated, click Assign color dynamically.
Note
Chart colors aren't available for multi-select picklists, currency picklists, or Task Subject, Event Subject, Knowledge Validation Status, and Opportunity Competitor picklists.
Tip

Some special picklists, such as Task Priority, Stage, or Partner Role, have additional information that you can edit.
If you use record types, changing the default value of the master picklist does not affect the default value of the picklist for a record type.
For Salesforce CRM Ideas, setting the default value of the Categories or Status picklistsdoes not affect the default value on the Salesforce CRM Ideas pages.
If you change the label for a picklist value that is used as a filter criteria on a report, the picklist value is automatically removed from the filter criteria. For example, if your report contains a filter where Lead Source equals Email or Web and you change the picklist value Web to Referral, your report filter will change to Lead Source equals Email. If the changed picklist value was the only value specified for a particular filter, it will continue to show up in your report filters, but an error will display on the report wizard.

Click Save.

2)Additional Options for Updating Picklists

Use the following options to edit picklist values.

Click Edit next to a value to change the name, make it the default picklist value, assign a color to use on charts, or change additional information.
Click Del next to a value to remove it from the picklist.

Special picklists—such as opportunity Stage, Task Priority, Task Status, Lead Status, and Case Status—may prompt you to map the deleted value to another existing value in all of your organization’s records. You can map the values or leave your existing data unchanged.

Click New to add values to the picklist. If you use record types, select any record types that you want to include the new values.
Click Reorder to change the sequence of picklist values.
Click Replace to change the values of picklist fields in existing records.
Click Printable View to open an easy-to-print list of your picklist values.
Click Chart Colors and select an option to assign colors to picklist values for use in charts:

Assign fixed colors to all values assigns a fixed color to each value from the standard set of chart colors. The Chart Colors column shows the assigned colors. Manually change assigned colors by editing picklist values. For example, if you want Closed Lost values to always show up as red in charts grouped by Opportunity Stage, assign red to that picklist value.
Assign colors to values dynamically assigns colors when a chart is generated. The Chart Colors column shows “Assigned dynamically” for all colors. Assign fixed colors by editing picklist values. For example, if you only need certain picklist values to show up as fixed colors in charts, manually assign colors to those values and leave the rest as “Assigned dynamically.”

3)Managing Record Types

Available in: Enterprise, Unlimited, and Developer Editions
User Permissions Needed
To create or change record types: “Customize Application”Record types allow you to offer different business processes, picklist values, and page layouts to different users based on their profiles. Record types can be used in various ways, for example:Create record types for opportunities to differentiate your regular sales deals from your professional services engagements and offer different picklist values for each.
Create record types for cases to display different page layouts for your customer support cases versus your billing cases.

Record Type ConsiderationsKeep the following considerations in mind when creating or changing a record type:The following special picklist fields are not available for record types because they are used exclusively for sales processes, lead processes, support processes, and solution processes:

Opportunity Stage
Case Status
Solution Status
Lead Status

You can use these fields to provide different picklist values for different record types by assigning a different process to each record type.
Person accounts are account records to which a special kind of record type has been assigned. These record types are called person account record types. Person account record types allow contact fields to be available on the account and allow the account to be used in many situations as if it were a contact. A default person account record type named “Person Account” is automatically created when person accounts are enabled for your organization. You can change the name of this record type, and you can create additional person account record types.
You cannot delete all the record types for an object if the object is referenced in an Apex script.
You cannot deactivate a record type if it is in use by an email routing address for Email-to-Case orOn-Demand Email-to-Case.
To create record types for campaign members, click Your Name | Setup | Customize | Campaigns |Campaign Members | Record Types.

Record types can only be assigned to campaign members using the Campaign Member Type field on new or existing campaigns. To assign record types to campaign members, add the Campaign Member Type field to the campaign page layout. You must have the Marketing User user permission to change the campaign member type. You can also add a read-only Campaign Member Type field to the campaign members page layout.

The following campaign member picklists are not available for record types:

Status
Salutation
Lead Source

Salesforce recommends creating no more than 200 record types. While there is no limit, organizations may have difficulty managing their record types if they exceed 200.