Actually I am going to make a slight correction to Laurie's information.
When you save the new style initially, it places into the styles palette, but it is only a temporary creation. It isn't added to any library until you use the preset manager. So if you "reset" your styles palette (and haven't used the preset manager) and then open the library you had open, you won't see your new style.
For brushes, shapes, patterns, styles etc. the initial creation is only a temporary creation until you use the preset manager. "Temporary" is a somewhat confusing thing though because your new style/brush/etc can be there for weeks in the palette so it seems like it is permanent, but it isn't. If Photoshop decides to glitch upon opening and create a new preferences file, all those "temporary" creations will be gone.
As to where to save them when you use the preset manager, you can save them anywhere on your hard drive, including the preset folder in the programs folders of Adobe, but the more you put into there, the longer it takes Photoshop to load up. I have created my own folders outside of the Adobe folder. I have mine in My Documents. I made a sub-folder called Adobe presets - then I made additional sub-folders under that for each type of preset - brushes, styles, etc.
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This is the one thing about CS2 I don't like at all; is the inability to totally customize my workspace with palettes and tools where I want them. I have a serious adversion to drop down menu's and such!
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As for Tracey's asking about saving workspace etc. CS2 has great abilities to customize the work space. There is a "menu" edit function so that you can set the menus just as you like them, hiding features you never use, or color coding them to make them stand out, and even creating your own shortcuts for them. Edit>Menus is where you do this.
As for the workspace, you can open the palettes you want, place them in the locations you want, and under Window>Workspace>Save workspace you can then give it a name so you can have it exactly as you like. You could have several workspaces if you want if you want different palettes open for different purposes. For example, Tracey, you do digi-scrapping, but you also do web design, so you could have different workspaces for each of those.
If you look under Window>Workspace you'll see several already there, including one that says What's New in CS2 - this one color codes new features. If you have your workspace set as you like it, save it. Then try out some of the others. You can always go back and load your own workspace after you've played a bit with the others. If you make changes to your own workspace that you like, don't forget to save it again.
Hope this helps.