If it's just two floors I wouldn't say it matters a whole lot. Most hardware I've had will cross one floor easily.
I've got three floors and so I get the best result having the router in the middle floor. I used a power-line Ethernet adapter to connect it to the modem in the basement. At 40 Dollars I'd say it's a much easier choice than retrofitting a house with ethernet cables.
The dipole antennas on routers have a characteristic emission profile. Basically, when the stick is pointing "up" most of the signal is radiated sideways, and practically nothing goes upwards. So if you point the antenna horizontally you can increase the signal directly above the router, at the expense of the horizontal plane.
I actually ended up "fixing" my house by placing a second AP on the top shelf of a closet on the main floor. Once I got the main router sync'd, it worked like a charm, and all the devices happily switch to whichever signal is strongest. DD-WRT FTW!
If it will work at all, you'll need to put it on a middle floor, probably with the antennas horizontal.
Most antennas are dipoles. They don't radiate in a sphere but more like a cylinder (so less towards the top and bottom of the antenna). If you get a "higher dB" antenna, this becomes even more pronounced (those extra dB have to come from somewhere - yep top and bottom of the sphere).