Docs can be stored anywhere you wish, but I recommend using something like /var/mobile/Media/Docs for a folder. You can also organize the documents in subfolders for better usability. You can save the default folder so that the app looks in that folder on next load. You can also use the app to view system plist files and such.
Note: for help on copying files to your phone, use this SSH/SCP guide: http://sleepers.net/blog/?page_id=20.
1.14 changes: Allowing for UTF8 string scan for folder names for foreign language files.

