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From seeing others posts, and drawing on my own experiences, what I think is this :
If you have a largish site, which logically breaks down into several topics, without much need for cross-linking between the sub-domains you may be alright. If you want to play safe, use sub-folders instead
If those engines that treat sub-domains with suspicion are, or should be a major part of your traffic plans, don't use sub-domains, stick with sub-folders
About.com is a good example of a site that can, and probably should, use sub-domains. They have more content than you can shake a hairy stick at, and it breaks down into the categories quite well, with a mix of the ads and articles. The use of sub-domains is logical in organising content, and apart from the "related" links away at the bottom left, they are pretty self-contained.
If your site can follow that model, then sub-domains may be appropriate. If you just want to do it to get an extra keyword in the URL for a page, with only 1 or 2 pages below each sub-domain, then you'll likely get slammed
Would those who have a better grasp of this topic say that is a fair summary, or am I missing the point somewhere?