>I'm wondering if I should go adhead and pay for Adwords as well.
Studies have suggested that having a sponsored ad next to your natural listing can enhance your credibility and result in higher click thrus for your natural listing.
>any opinions on if it would be better to be at the top in #1 or 2 spot, or along the side in lower positions.
If you're running on the Search Network, the higher the position the better, IMO. Sponsored ads on AOL, for instance, appear above the natural listings ... the higher the ranking, the higher the CTR. Some have argued that the premium positions on Google don't actually fare as well as the top 2 listings on the right-hand side, though I have seen no evidence of that.
I've seen that I make more profit when I am in the columns rather than at the top. Yeah, you get more clicks in the premium position but people don't always buy at the first site they check out. Plus the whole row is clickable, I've clicked ads accidently myself.
Also, I have at least one product that WAS page 1 of Google SERPs until last month or so and its sales have gone down now that I only have an AdWord ad on the page. Used to be there was a SERP result with an adjacent AdWord ad with the same company name and I know sales were better. There could be other factors in play here, but the fact is January and February were my worst months in a while for that product.
My favorite spot is either top of the column. The bottom is okay too if there are about 5-6 ads. The ads are just more prominent this way.