It’s a tricky question and one I haven’t tackled yet either, but from my understanding of general SEO principals, you should be using sub-folders rather than sub-domains. Google treats a sub-domain as an entirely different website, meaning you would be starting from scratch for each of the sub-domains for building links and search rankings. Essentially no different than getting a new URL for each website.
Using sub-folders, you get the benefit of starting from the strength that your root domain has already built. Then, with a few well targeted links to the sub-folders, you should enjoy stronger rankings out of the gate. Webmaster tools allows you to geo-target a sub-folder, so there isn’t an issue there.
The main question is are you targeting specific countries or are you targeting languages. If you are targeting countries, then assigning a geo-target in webmaster tools will allow your site to be found in Google France, Google Spain, etc. If you are just creating language specific pages, then people searching in those languages should be able to find you. It gets fuzzy for me when it comes to the question of will you show up in Google France with a .com domain that has French text on it. Maybe someone else can chime in on that.