Msg#: 3917867 posted 5:28 pm on May 21, 2009 (gmt 0)
If you're careful about canonical url issues, most offerings of add-on domains can work out OK, from what I've seen. But many add-on domains can be accessed through multiple URLs, so take a good look at the specific offering in your case.
...a downside since all links will come from same ip (so your interlinked sites will loose some value there)
Google has many ways of seeing and devaluing the "incestuous" nature of backlinks, even from completely unique, dedicated hosting. It's pretty hard to rank competitively on the strength of your own domains alone. So I'd say you need to focus on building a solid backlink profile for each domain you use.