Some time ago I struggled with the same problem, and after reading articles on the seomoz blog and questions posted here I went for subdirectories.

subdirectories still give you the ability to add those folders to Google Webmaster Tools and set regio for that folder. You can go with country specific domains as well, but you will have to build links for every domain, whereas you only have to do it once when you choose subfolders.

Hi,

The Google Keyword Tool DOES provide enough long tail keywords for Spanish keywords. Maybe there isn't enough data available for the niche you're in, but I never had a problem finding Spanish long tails. Make sure you allready use 2 to 3-word keyword phrases and the results will probably only show phrases made of 3,4 or even 5 keyword.

Another thing you should do is look at the buying cycle of your product/service... In every stage the consumer will have some questions, indentify those questions AND the answers and you will come up with some good long tails... I'm working on an insurance site at the moment (Dutch website), and here are some questions that were generic for every product they sell.

-  compare (e.g. car) insurance prices

• overview prices (e.g. car) insurance

• calculate (e.g. car) insurance price

• tax benefits (e.g. car) insurance

3th tip: make use of the google auto complete tool!!! There you will find some inspiration as well!!!