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Can somebody tells me in terms of SEO if the use of subdomains is better than the use of folders?

I'm developing a classifieds page, and I already know that many classifieds like Craigslist use subdomains to have presence in certain city, is this really to help the rankings in search engines?

Is better to use folders for this case to increase my rankings in search engines? Many SEOs have told me that I have to use folders but I'm not quite sure.

migrated from superuser.com Sep 11 '11 at 2:38

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No, subdomains are not better. A subdomain is a completely seperate hostname. A site like craigslist is not concerned about SEO -- they already have brand recognition and people know to seek them out.

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