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This is a good discussion
I think the both of them are good but i think the subdomain will give you a better boost
/Ove
Welcome to WmW!
In theory, the subdomain structure is more beneficial because it allows you to present the same content higher up in the directory structure. There is a limit to how deep the few remaining free crawlers will go, and engines like AltaVista have stated that the depth of the content plays a role in determining relevance.
Another advantage has to do with results clustering. If someone searches for some kind of broad term, and you have multiple pages that could be a match, pages from different subdomains will be displayed individually, while multiple pages from a sub directory structure will not.