Blog on blog.domain.com or domain.com/blog
maw: This is easily the single most important question a nascent organization faces.  Get it wrong and every bad thing ever mentioned in a chain letter will happen to you and each of your collaborators, many times over.(Honestly, I doubt it matters much, but blog. is my [slight] preference.  In any event, it isn't difficult to make one redirect to the other, and it's wise to do so, whether the Google juice the other answerers mention is important to you or not.)