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The pure SERPS are on Alltheweb and Altavista. Y! then takes these and blends a subdomain penalty and promotes YSM! search partner sites to produce the Y! SERPS.
Yahoo (Google, and many other sites) use subdomains (for instance, to seperate services, like adsense.google.com), so I dont understand having a subdomain penalty.
That comment was prior to this update. Y! appears to be getting its act together!
There's a big difference between adsense.google.com and how-to-make-money-with-adsense.im-the-big-winner.com
Looks like Y! has now better addressed subdomains with this update.