Should currency be exchanged in US before departing? If not, where in general are best places to do exchange in Shanghai?

No, currency should be exchanged on arrival. Rates are set daily and are effectively the same at all official exchange outlets (branches of mainly the Bank of China and exchange counters in major hotels overseen by the bank). So change at the airport on arrival or use an automatic banking machine (and for notes on that see numerous previous posts).

Peter N-H
http://members.shaw.ca/pnhpublic/China.html

Be sure to keep your encashment paperwork as you will be required to produce this at the end of the trip when you want to reconvert any leftover yuan.

You still receive the best rates by accessing the ATM machines directly in China. Make sure you go to a large bank like Bank of China or Industrial and Commercial Bank of China since these will most likely accept your ATM cards. Some of the regional banks did not accept our cards.

In regards to exchanging yuan for dollars (or whatever foreign currency) at the end of your trip, another suggestion (what I always do) is to pay part of your hotel bill in yuan. (assuming you will be paying with a credit card)