The best physical location of the wireless gateway changes depending on what kind of antenna it has. Different antennas have differently shaped areas of space that they cover. The type of antenna on the box that you purchased looks like it transmits a signal up and around it, and not so much down. So, if you put it in the basement, it would give you good coverage for the 3 levels. If you put it on the middle level you would probably want to have the antenna parallel to the floor to get good coverage both above and below, and if you put it on the top level, you'll probably want to have the antenna pointing down.

These links might be helpful:

http://kbserver.netgear.com/kb_web_files/n101318.asp
http://www.wi-fiplanet.com/tutorials...le.php/1144391