The advantages of sub domains for SEO are tangible, however they also have drawbacks. For instance, sub domains are harder to set and manage. Another disadvantage, and it's a major one, is that sub domains don't always inherit metrics from the main domain (i.e. if your main domain is PR5, your sub domains could be PR0 because for Google both are not closely related). In many cases, this alone is enough to make you give up the idea of using sub domains at all ‐ since the sub domains are not inheriting metrics, this means you practically have to optimize them from scratch.
If you expect a longish list of SEO benefits of sub folders, there is no such list because basically sub folders have only two advantages. First, similarly to sub domains, with sub folders, you can have the keyword in your URL. Second, sub folders inherit the metrics of your root domain, which means that if your site is doing well on a whole, any content in a sub folder automatically benefits from this, while with sub domains you might have to start your SEO efforts from the very beginning.
The main SEO disadvantage of sub folders is that they could limit your exposure, if search. results are already saturated with pages from your site. As I already mentioned, Google generally limits the number of search results per domain to 2 or 3, so if you have more pages that are relevant, they might not show in the main search results.
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