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Don't place the exhaust fan too close to the shower because moisture will damage it quickly, and avoid drilling holes in the area where the pipes run. The best option is to install it on the wall opposite the shower, preferably near the ceiling, with an exhaust pipe that goes directly outside or through the roof.
The hot air outlet has to go outside the house, otherwise everything stays damp anyway - lots of people forget and put the duct venting into the attic or behind a piece of furniture. I agree with what people said about keeping the exhaust fan away from the shower, and as for the actual installation, if the bathroom is really small, put it in the ceiling above the area with the most steam (usually near the mirror) because it takes up less space than putting it on the wall and the air exits better going upward.
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