If you're not using an overflow tank on the radiator the coolant level is probably below either of those two locations. Wouldn't hurt to drain off a little more, particularly if you use the head as it's lower.
Factory location for the sensor was the head. In different years, different engines that wasn't always true. Manifold location will usually read 10-20 degrees below the head temp. If the you run a 180 thermostat then manifold should read real close to that. If it runs hotter than that then your cooling system isn't up to the job.
As I said the head temp should run 10-20 hotter if everything is normal. If the engine is running really lean or the timing is off then the head temp may be even hotter. Of course if it does run too hot using the head location is that because the engine isn't properly tuned or because the cooling system can't keep up? You can't tell without knowing the manifold temp.
On a properly tuned car either location will give you a good idea of what's going on. Put there are cases where neither location can tell the whole story.