Subdomain or Subfolder – Pros & Cons

I am setting up a new (and my first) hosted site which will contains a wordpress blog as the first part (Phase I) of the site which will later migrate to a full blown niche site.(Phase II) I currently have WordPress installed in a subdomain “blog.domain-name.com” and redirect http://www.domain-name.com to blog.domain-name.com. Since the subdomain is really in the folder …../blog it can also be browsed to from “www.domain-name.com/blog” (I assume this is expected behavior since I am new to this game). That being the case I can create a link or page either to the subdomain or the folder from my full website homepage later (Phase II)

From a design, traffic, support, SEO, or other standpoint are there any pros or cons to using a subdomain vs a subfolder.

Any advise or comment??