Some thing i come across quite often in Search engine optimisation is the use of keywords in sub domains. I have also been asked about placing keywords in sub domains but i always usually say no.
The view i generally have of using keywords in sub domains are that they come across as being very spammy. You need to remember that optimising a website should have the user as your priority not the search engines. Bearing this in mind i would not advise adding keywords as a sub domain on your website as there are very few instances when having keywords as a sub domain would be the best thing for your user.
There are also other implications with trying this method, if you start to concentrate the focus on getting keywords into subdomains then you start to change the structure of your website and for the worse. IF you start creating sub domains then you are changing the structure of your website. Having a website spread across many sub domains is not providing the best structure for your website and for your users, you end up with a messy structure for the purpose of SEO with the keywords being used as the sub domain carrying little weight because google is a little to clever to be fooled by people using keywords in sub domains. You end up with a site that is not logically navigated and is harder to maintain.
A much better solution is to use your keywords as sub folders. This is much more acceptable as it slots into the structure of your website in a more traditional way, the keywords generally dont stick out as being spammy as the folders should be logically sorting your files. Having your keywords in your folder structure over a sub domain may not carry any extra weight when it comes to ranking, however add the weight it does bring with the advantages of structuring your website in the correct manner and you will have the result of a better ranking website than if you used sub domains.
Gary
SEO Project Manager