The Right Height
The traditional advice has been that you should tee your ball so that its equator is even with the top of your driver. These days, that's too simplistic. Metal woods, which are now used by nearly every golfer, have a lower center of gravity than old wood-headed clubs, which means you'll usually want to tee the ball a bit below the 'equator' guideline.
Tee height also depends to some degree on the nature of your swing. If you're a sweeper of the ball you probably prefer a slightly high tee, to give you the feeling of staying behind and under the ball. A more downward hitter, on the other hand, will generally opt for a slightly lower tee to encourage the strong lateral move to the left that creates the down-and-through type of impact.
It's fine to begin with the equator rule, but you may be cheating yourself if you don't experiment a bit with higher and lower tees until you pinpoint the ideal height for your swing and your club.