How well do you find them working?

Have you found that a site on http://www.domain.com works better than a site on http://www.domain.com/niche/ http://niche.domain.com? or vice versa?

What about going down even further with sub domains and using two or three levels such as http://mainniche.subniche.domain.com

Just curious more than anything as i have noticed a small drop in the SE's of sites listed using sub domains.

Regards,

Lee