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Being long time fans of php the initial reaction is to build everything dynamically around database driven pages.
This brings the question of structure:
1 - Use typically two arguments on each page
2 - Use sessions
3 - Use complex mod_rewrite to create virtual file structure and remove need for arguments
Which of these will be best for google? We will in any case be using .html instead of .php, as it looks better for human browsers.
Are there any other pitfalls to be avoided? Is our plan to use 8 subdomains of the site foolish, in Google terms?
Sessions on the other hand can cause problems if you use session ids in the querystring. I don't know if you can use session cookies in PHP, but obviuouly these can cause problems too simply because Google can't handle cookies.
So in answer to your question - #3 is probably safest, but #1 should be OK too.
PS. also subdomains are not a problem, but be careful about duplicating the content.