Your saddle needs to be horizontal to the ground. Slopping upwards will probably result in pain in your crotch, slopping down will result in tired arms/ or hands.
Saddle height should be more or less at your belt when standing next to the bike, also sitting on the bike and when the pedal is at the lowest point, your leg should be almost fully extended. This is a good way to determine the right position.
For our number crunchers out there, the measurement from the center of the bottom bracket to the top of the saddle should be: Hs = 0,885*Hc, where Hs and Hc stand for height of the saddle and inner leg measurement (floor to crotch).
At this point take your tools and go for a ride and adjust if necessary: even half a centimeter can make a lot of difference!