My situation is this, I have been using linux for a few months now and I am comfortoble doing the basic stuff. I have read the tutorial on compiling programs on this site but one question that I havn't found an ansewr to is "where is the proper place to install programs"?
a few examples: VIM, aterm, Frozen-Bubble. As far as I know all these reside in the /src directory as per the tutorials instruction. Any clarification would be much apreciated!
p.s if you could give examples of where you would place these that would help.

I put all mine in /usr/local/ somewhere.

You (usually) do:
./configure (if a configure script exists)
make (to compile the app)
su (to become root)
make install (to install system wide where any user can get it)

by default most programs put their executable in /usr/local/bin and just about everything else in /usr/local/share/<programname>

if you pass --prefix=/usr (or --prefix=/opt etc...) to ./configure then it will install into /usr/bin and /usr/share/<programname> or /opt/bin /opt/share/<programname> instead.

You can delete the source directory once you've installed the software.

A quick Google returned this page.

Seems a good answer.

Very good document. Thanks for the link.

Thanks for clearing that up and for the quick response.

if it helps at all -- it really doesn't matter where you put stuff accept for instance KDE programs need to be in --prefix=`kde-config --prefix`
and gnome2 programs need to be in --prefix=`pkg-config --variable=prefix ORBit-2.0`
gnome1 programs go in --prefix=`pkg-config --variable=prefix ORBit`
so they can "find themselves"

other than that just ./configure defaults to /usr/local so as not to overwrite system files in /usr
this is mainly so developers can tinker with new versions of things while using the old version to do real stuff

generally actual installs of core stuff goes in --prefix=/usr

there is one more twist to this as some people keep some things in /usr/local so they are safe from system upgrades to /usr