Clint -
The ideal place for a center channel is actually in the middle of the screen. Of course, that’s impossible unless you put a speaker behind an acoustically transparent screen.
The next best place is immediately above or below the screen.
The reason for the location is because the center channel generally contains the dialog or other on-screen sounds. Because of the directionality of non-bass frequencies, the human ear can actually tell if the sound is coming from about the right place, so it will sound “wrong” if the sound comes from somewhere else. Above and below the center of the screen are close enough that it doesn’t matter.
We do use ceiling-mounted speakers (L/C/R and surrounds) in some instances. When we do, we always make sure the speaker is angled toward the viewer, so that the directional sounds don’t go straight down into the floor, and then get distributed in a fairly random pattern around the room. Angling the speaker toward the listening area will make sure the sound appears to be coming directly from the screen. However, in order to make this work, you need to have the L/C/R ceiling speakers as far forward in the room as possible. Otherwise, the ear will localize the sound to be too high.
Note that, from a purists viewpoint, this isn’t ideal. But from an interior design viewpoint, it may be desirable for any number of reasons.
Also note that several companies have been experimenting with front height channels - that is, a left and right front channel that’s roughly above the normal L/R speakers. These manufacturers believe that the additional height channels will increase the perception of the soundstage, offering a fuller sound than possible with just a flat speaker arrangement. Of course, height channels are not practical with ceiling mounted L/C/R speakers!