I was frustrated with having MP3's converted and dumped into "~/Documents/iTunes/iTunes Music" and nothing showing up in my "~/Music" folder so I created an alias to "~/Music" and put it in the documents/iTunes folder.
After moving the files from the old itunes Music folder into the Music Alias folder, I deleted the old "itunes Music" folder and renamed the alias "iTunes Music." Now anything I convert magically shows up in my user/Music and all is well with the world.
good luck
Mac OS X Hints
http://hints.macworld.com/article.php?story=20011220101323639