Story points are a measure of the effort needed to complete a story. The units are completely arbitrary and are only of value as a relative measure. e.g. 6 points takes roughly twice as much effort as 3 to complete.
Story points are assigned via T-shirt size estimates and are totaled to establish the velocity of the team for each iteration.
In my team a Small story = 3, Medium = 8 and Large = 15 points. A Large story is the biggest feature that the team can add in a single iteration.