Out of the box, the "Create a network" option will give you subfolder blogs or subdomains. If you wish to use multiple domains, one for each sub site, you need to use this plugin:
http://wordpress.org/extend/plugins/wordpress-mu-domain-mapping/
And follow these steps:
http://ottopress.com/2010/wordpress-3-0-multisite-domain-mapping-tutorial/
except if you are hosted on Godaddy follow these steps:
http://gmichaelguy.com/blog/2010/11/28/my-wordpress-3-0-multi-site-domain-mapping-with-godaddy/
