It wants it to be in your head. However, if the css is not too important to load right away, you will get google's pagespeed tool telling you to put it in the bottom of the body.
As an example, I use one of the jquery themes (redmond) to style my autocomplete. No need to put this in the top of my page as it will just slow down everything else.
So, don't worry too much about perfect w3c validation.