The answer to this question varies on several factors. Depending on the type of ads you're displaying (text or image) and the type of site you have, will determine the best ad placement for you.
If you have a niche specific site, ads placed almost anywhere could be beneficial whereas if you're covering many different topics, niches or sub-niches, they would probably work best if you tie them into individual posts. Placing contextual ads within the sidebar may be a good idea, but I personally think Google Ads (or any contextual ads for that matter) look "hinky" and out of place (just my opinion though).
Whenever I have used gAds in the past, I would always use them within actual posts and pages and make them fit, look and feel like they belonged. I seemed to get better results (CTR) that way as it didn't throw off the flow of the article and it looked like it belonged.
The trick there, however, is to keep a close eye on the ads G will show. If any contradict with the content of your article and/or site in any way, you will want to stop that particular ad from showing in the future.
As with everything, it would be wise to test different ad placement strategies as the results will vary with every blog. What works well and looks nice for my blog may be just what dies out on your blog. What works on one site may not necessarily work on others' blog sites.
