pageoneresults - 3:37 pm on Dec 16, 2008 (gmt 0)

Cutts said that sub-domains and sub-directories would be traeated more equally by Google in the future.

They've been saying that now for a couple of years and I'm looking at a search result now where there is one listing from the root domain and two more listings from hostnames. So, I think the key phrase in the above is "in the future" because I surely don't see them treating them the same as sub-directories, not one bit. Hostnames rock! Always have and probably always will if set up properly to begin with.