I should have qualified what I meant by "best": in the post above I was using it in terms of "least likely to cause problems".
The cheapest way of doing this is to run phone cable (i.e. RJ11 at either end) from downstairs to upstairs. If it works, and it almost certainly will with no problems whatsoever, then that's the simplest thing to do.
However, if the line to the exchange is marginal, the signal degradation caused by the extra length of cable may cause it to fail, either completely, or to give a reduction in speed (the modem will fall back to whatever speed it can get). In that case, the best thing to do is as I suggest and put the modem directly onto the line as it comes into the house. In that case you'd have to run CAT5 cabling (which has RJ45 connectors) from the modem to the PC. CAT5 cable is more expensive than phone cable.
The chances are however, that there will be absolutely no difference in terms of throughput which way you do this. as a first option therefore, I'd be inclined to go with putting the modem at the PC (and against my previous advice on what's "best"!).
Another alternative is to go (local) wireless, which gets round the problem of having to wire internally. In that case, place the modem as close to possible to where the phone line comes in. However, assuming your PC doesn't already have a wireless adapter, you'd have to buy one. It's also not as straightforward to set up (e.g. unless you want your neighbour's sharing your connection you have to set up password protected access).
