I encourage you to put the repository definition in the POM, this way any developer just grab a copy of the code and run Maven to get it compiled, without having to change things in his settings file.
I find the setting.xml file useful just for hacking Maven's behaviour in special situations, for example when one repository is not accessible due to a firewall and you need to use a mirror. But that's my personal opinion. Maven documentation gives you more freedom:
The settings element in the
settings.xml file contains elements
used to define values which configure
Maven execution in various ways, like
the pom.xml, but should not be bundled
to any specific project, or
distributed to an audience. These
include values such as the local
repository location, alternate remote
repository servers, and authentication
information.
If you have a local repository which is used in every single project you may add that at the settings.xml, just be sure that configuration is well documented, in my current project it's not and new developers struggle at the beginning when they try to compile something.