Location of LaTeX packages

Directories where latex looks for packages:
/usr/local/share/texmf/ls-R...
/var/lib/texmf/ls-R-TEXMFMAIN...
/var/lib/texmf/ls-R-TEXLIVE...
/var/lib/texmf/ls-R...

Command to update tex about where to look for packages : texhash <new locn>

To add a .sty file where latex can find it, do
$ kpsewhich -var-value=TEXMFHOME
/home/gtholpadi/texmf
$ cp mystyle.sty /home/gtholpadi/texmf/tex/latex/local
"tex/latex/local is usually reserved for stuff installed on individual machines" (from here).