[eluser]johnpeace[/eluser]
If it's a Model, put it in /system/application/models...
If it's a library, put it in /system/application/libraries...
How can you tell the difference?
I do it like this: in my applications, Models are representative of my database and are a way for me to interact with my app's data. Libraries are classes that perform certain functions (like my Google Map API library, or my SugarCRM library), but don't represent the data in my DB.