There is several advantage of having your blog on a sub domain as well as disadvantages. Most of my blogs are on the sub domain but I too have domain which is installed on the main domain. It is better to have a blog on sub domain if the main domain is a website and these blog posts can help you to update and release latest news about the company.

By having a subdomain blog on the main site you’re newly created pages and product can be indexed fast by search engines. It also brings the newly created page link popularity and you can also do deep linking to your pages inside the main domain. Subdomain blogs doesn’t need to be update that often since subscribers to that blog is quite few. Because the visitor are interested in their main site.

Other advantage of having a subdomain blog to the main site is all the posts added into the blog will be treated as fresh content and the chances of the search engine bots indexing the main site is fast.

Disadvantage of having a subdomain is it not your main site and visitors will be little interested in visiting the subdomain blog. Visitors think the blog will be mostly related to news about product and services of the company and there won’t be much interesting content to read on a daily basis.

My blog is on a subdomain but that didn’t hinder from getting traffic to my blog. My blog stat brings me in daily 150-200 visitors which are not bad for a subdomain blog. My visitors to the main site bring in between 4000-4500 visitors a day which is not bad too. Since it offers free resource for webmaster and small business organization.

Even Matt Cutts blog is also hosted his blog on a subdomain and the Main page has just got a link to the blog but that doesn’t stop visitors reading this blog. His blog is one of the popular blog among the SEO and internet marketers.

The bottom line is having a blog either on subdomain or the main domain is not a problem as far as you are able to provide quality content which will drive traffic to your blog. So the key is unique quality content which is interesting to your readers.