I agree with everything Fonz said.
I'm not sure if a main domain with subdomain's or a main domain with categories is the best way to go.
http://www.domain.com,
http://blog1.domain,
http://blog2.domain.com
or
http://www.domain.com,
http://www.domain.com/blog1/ http://www.domain.com/blog2/
I've set up two blog networks in the last couple weeks with a 100 plus in each using the two models above, categories is a much faster setup.
I'll let you know in a couple months witch way the search engines likes the most