APT can't recognize Packages.gz?

[Redefined Horizons <redefined.horizons@gmail.com>]

I'm still having some trouble using a local repsoitory with APT.

I've got 3 debs in the "home/debs" directory.
I added the "debs file:///home debs/" line to my sources.list file.

However, I am getting this error when I start Synaptic, which has me puzzled:

"W: Couldn't stat source packages list file: debs/ Packages
(/var/apt/lists/__home_debs_Packages) - stat (2 No such file or
directory)"

Is APT not recogninzing the Packages.gz file that I create with
dpkg-scanpackages?
I have verified that the Packages.gz file is in the directory, and
even uncompressed it and opened the Packages file.

Do I need to leave the Packages.gz file uncompressed so APT can
recognize it, or should it do the unpacking automatically?

Is another problem causing my error message?

Thanks,

Scott Huey