For particle falling you need to set Gravity to 0.0 under Field Weights and set the Normal to 0.0 under Velocity (all located under the particle context). Then they will stay still.
Overall, your tree mesh is not dense enough to accomplish what you are trying to do. That is why some of the particles end up still on the trunk. If you make some really thin branches you will have more vertices to choose from.
Perhaps try out a tree from Blendswap that just has branches.
i was hoping to do small branches with leaves with the particle, make a variety of these branches then using the particle system i would add these small branches to the larger branches and trunk. (so i will be using particle system twice)
is this a practical way?
btw, the attached is still WIP so it will look better hopefully