C
This is one of the reasons I love this forum: it requires thinking because many who ask questions are thinking. (think about it;) While I understand what eyepaq is saying in one sense that search engines "could" treat them as stand alone; it appears search engines do/could because as the subdomain holder you are not seeing links going only to the main domain or other subs, you are the one who controls it, can move its hosting, etc. But, according to Google, they do not in the sense of linking:
If you own a site that’s on a subdomain (such as googlewebmastercentral.blogspot.com) or in a subfolder (www.google.com/support/webmasters/) and don’t own the root domain, you’ll still only see links from URLs starting with that subdomain or subfolder in your internal links, and all others will be categorized as external links. We’ve made a few backend changes so that these numbers should be even more accurate for you.
Note that, if you own a root domain like example.com or www.example.com, your number of external links may appear to go down with this change; this is because, as described above, some of the URLs we were previously classifying as external links will have moved into the internal links report. Your total number of links (internal + external) should not be affected by this change.
So, as for external linking, it is clear that if there ever was a question about domains and subdomains, there is none now. But, that does not mean you should not use subdomains. Eyepaqs point around user abuse is an excellent one, but you should also be monitoring this like a hawk.
At the end of the day, I would think that using subdirectories is going to be easier if you are planning on a large site. But, the ease you mention for the user with the short domain name is intriguing. I agree with Muhammad on sub domains might get a little expensive and, if your choice is to use both (I wouldn't as it seems to me that you are creating more and more work for your dev team) the canonical should be the subdomain.
Again, thanks for the thought provoking question.
Robert