By Bob Tourtellotte

LOS ANGELES (Reuters) - She fills two converted bedrooms with clothes -- one for casual and a second for glam -- and staying organized worked for singer Fergie who on Wednesday made People magazine's 2008 list of best dressed women.

"I don't like to throw anything away," Fergie said about the clothes in her "closets" for People's widely-watched Best & Worst Dressed 2008 issue that hits newsstands this Friday.

Joining Fergie, whose hits include "Glamorous," in the top 10 list were actresses Kate Hudson, Anne Hathaway, Gwyneth Paltrow, Charlize Theron, Eva Mendes, and Sarah Jessica Parker. Singer Rihanna and supermodel Heidi Klum also made the list.

Rounding out the top 10 -- and making a campaign statement for fashion -- was Michelle Obama, wife of Democratic presidential candidate Barack Obama, who was given high marks for a look that was "classic and confident."

"She has a look. She works it with confidence, and she knows what looks good on her," said People's Style Editor Clarissa Cruz.

But Obama played down the notion that her sense of style might be anything close to couture, telling People: "Some of my favourite summer dresses are from Gap and H&M."

"The thing they all have in common is that they all had a great year, stuck to their own personal style and stayed true to that," said Cruz.

The magazine's editors also spent time peering into the fashion choices of Republican vice presidential candidate Sarah Palin -- her rimless glasses, step-toe pumps and updo hairstyle.

"People are paying attention to what she's wearing, and we felt that was a news story," Cruz said.

Palin didn't talk to People, but her hairdresser did. She said the candidate would rather not discuss style choices "because she wants people to hear what she has to say."

The makers of the Kazuo Kawasaki eye glasses favoured by Palin told People that demand has been "overwhelming" and "mostly from the middle states."

Then there are those fashion moments People would rather forget.

The magazine's editors pick apart red carpet disaster dresses worn by singer and "American Idol" judge Paula Abdul and actress Lucy Liu, as well as the aqua-and-orange boots and fedora favoured by Patricia Arquette.

"These were stumbles that were too over the top to ignore," Cruz said.

Other highlights of the double issue include best dressed television show -- "Gossip Girl" -- and most memorable style moments including Lindsay Lohan's mink coat mixup in which she left a party wearing another woman's $11,000 (6,100 pound) heirloom coat.

(Editing by Belinda Goldsmith)