I have about 50 mini blogs (10-25 posts each) on subdomains, using wpmu.. they are getting PR and some traffic but if I compared lets say a milf blog on a subdomain and another on its own .com - standalone is better. I did not interlink these mini-blogs, but I did swap some links to my other blogs on smut/sensualwriter and other hosts. My plan was to build several of these networks (different IPs) and then interlink them per niche, but got sidetracked
so for now, "the blogs are maturing" lol, hopefully I'll continue the project down the road.
I guess it all depends on number of blogs you want to make, number of posts you plan to make on each, and how to promote.. if you want to build&forget, go with wpMU, if you want to spend time on quality updates and management, and can justify 20-50-200x$10 per year in domains, go with separate .com installs instead of subdomains..