I'm hosted with bluehost and am not allowed to do the subdomain installation of wpmu so I just did the subdirectories which isn't a problem.
I've just been creating subdomains manually that have redirects to the proper blog. However, the subdomains only work when I have the www. So I can't just go to blogname.hostname.com I have to go to http://www.blogname.hostname.com, even though I can get to the homepage either way. Does anyone know why this is and if there is a way to allow for not having the www?