Quote:
Originally Posted by donnie
In my experience sub-domains are MUCH better for SE. I am not sure why and I don?t really care. All I know is my ?sub-domain blogs? are always placed higher in serps. 
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Yes and no. Subdomains are pretty much treated like seperate domains and not like subdirectories by the search engines (because www. is a subdomain itself), but they get some authority (or however you want to call it) from the main domain.
That's the reason why blogs on blogger, xlogz, thumblogger, etc. rank so well, it's because of the strength of the main domain, not just because they are subdomains. Look a squidoo for example, similar phenomenon, but they use subdirectories. Bottom line: If it's on a popular domain, it ranks well, no matter if subdomain or subdirectory.
The advantage of subdomains or domains is that you can put them on their own IP and the URL is more memorable, the advantage of sucdirectories is that they often get crawled and added to the index faster.
I personally prefer subdomains, the URL looks better and the respective keywords get more emphasis when someone looks at a result in the SERPs and the keywords he was looking for are at the very beginning of the URL.