A general rule of thumb is to set up cleats so the toes point ever so slightly inward. Generally, cleats will have about 2-5 degrees of float or drift, so if you don't get the angle quite perfect its not a huge deal. For the forward and back placement, put it right on the ball of your foot. Remember that this is just a starting point. After you ride awhile, adjust the cleat placement to where you find it most comfortable.

@talldog: Although I think 2 times faster is a bit exaggerated, cleats are a much more efficient way to pedal. Of course, you can pedal on both the up an down strokes. I notice the difference especially on hills and when I'm trying to accelerate when that extra power is desired. As an added bonus, you don't have to worry about your feet slipping off.