My tree looks something like
Code:
www
|
+-- site1
|
+-- web
|
+-- include
Web is the document root for a site. In your situation, I would put it next to the html directory. For me, it gives the advantage that the include files 'stay' with the corresponding site (in case you host multiple sites like I do).
PS
It's more secure as a browser can not access pages that are not under the document
root.