I'm just made a similar move, moving my blog from blog.domain.com to domain.com/my-blog.

I don't think I can use the Google change of address - it is throwing me an error when I get to that step in the change of address because I'm going to a sub directory, not to the root. "The old site redirects to www.domain.com/my-blog, which does not correspond to the new site you chose."

Should I care? I'm getting organic traffic already on the blog URLs, and Google has indexed about half of the URLs that I submitted via the sitemap.