Thanks for clearing that up Rand, I'll stick to the one subdomain.

These links are the one's that got me thinking.

http://www.mattcutts.com/blog/subdomains-and-subdirectories/

http://www.webmasterworld.com/google/4339166.htm

Also, I was under the impression that sub forums on one domain were viewed as different sites in the SERPs but try searching for 'bodybuilding'.  You'll see www.bodybuilding.com at the top and a list of pages from that site and 2 further subdirectories are included (forum.bodybuilding.com and bodyspace.bodybuilding.com).

Although a personal preference only, I prefer subdomains and think forum.domain.com and blog.domain.com look much better than domain.com/forum and I would do it this way IF the rankings were unaffected.

I've had a good read on this one and just wondered whether the info on the below link is still valid 3 years on:

http://www.seomoz.org/blog/understanding-root-domains-subdomains-vs-subfolders-microsites

My main site is a forum but I want to add further content in the form of a blog.  It seems logical to me that domain.com/blog/ would make more sense than blog.domain.com as the the content and inbound links to the blog would also help the forum where it's on the same subdomain, however I just wanted to make sure that was still the case as I've also read that Google now see a subdomain and subfolder in the same way if set up correctly in webmaster tools and this solution would look neater if that was the case.

Thanks all.