you can use this plugin it does everything for you just put your pub, http://www.linewbie.com/attach-diy/files/all-in-one-adsense-and-ypn.zip i m using it on my website you can check how it shows the ads http://www.areyouamuslim.com
I think adsense-deluxe is good enough to try out --> http://www.acmetech.com/blog/2005/07/26/adsense-deluxe-wordpress-plugin/ Hope the link would help answer your question.
You can either use a plugin as mentioned in the previous comments or you can manually add the code into your posts/sidebar.