Although you should really set the guitar where it is most comfortable for you, the most common starting point is about where it is when you play sitting. I personally have never liked the can pick your teeth with the trem arm height thing, but I will say it does vary by body style. The radical shapes hang lower than the more traditional for me.
Keep an eye on those strap buttons for a week or two, you never know what may happen over the long run, then check it once a month or so.. Gravity is a bitch, so show it a little respect in this matter....
