Ever wonder how Google views subdirectories or subdomains when it comes to placement on Google.com? In this video Matt Cutts the Google spokesperson to my industry, talks about using each and how Google indexes each.
Previously some webmasters set up multiple subdomains in an effort to have Google show more results, but Matt Cutts now says that this is not a strategy that Google rewards. Google now recognizes subdomains as part of your parent domain listing on Google.com and “squenches those listings now all together on the search results page”.
Further he says the historical reasons on why you would have previously wanted to set up your website with subdomains do not apply as much on Google today. His personal preference and mine as well is to structure your website with subdirectories and not subdomains. However, he ends the video stating whichever tactic is easier for you, you should use that way for your own purposes.