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In May, Edmondson wrote an email to Google engineers...and asked whether he should break up his site into “subdomains,”...In June, a top Google search engineer, Matt Cutts, wrote to Edmondson that he might want to try subdomains, among other things.
The HubPages subdomain testing began in late June and already has shown positive results. Edmondson’s own articles on HubPages, which saw a 50% drop in page views after Google’s Panda updates, have returned to pre-Panda levels in the first three weeks since he activated subdomains for himself and several other authors.
And hosting each subdomain in a separate country isn't on.Just a small point - I believe you can host subdomains in different countries.
However, we are showing in our webmaster tools that our site has 231 missing pages that we have deleted on purpose or moved to a subdomain. This may be causing a problem...