What is the significance of the star next your name on the squad list in Battlefield 3?
This does indeed mean that you are the Squad Leader. As Squad Leader, you have the functionality (or obligation if you prefer) to assign squad tasks. This basically amount to attack/defend a certain point (you get bonus points if your squad then complies).
If you are squad leader, you can set an objective by pressing the "spot" command while targetting the objective.
Also certain servers only allow people to spawn on a squad leader, but a squad leader can spawn on any other squadmate.