An alternative to a sub-directory (which can be tricky to reconfigure in WP), is a sub-domain or a
dreamhosters.com (note the "-ers") sub-domain.
For example, if you own
example.com, you can setup
test.example.com and put your new site there for testing. You can setup any number of sub-domains on your domain for free. To add the sub-domain, click the "Add Hosting to Domain/Sub-Domain" button on the Manage Domain page of the Panel and enter
test.example.com in Domain to Host. The sub-domain's files can be hosted under an existing user, or you could create a new user account just for testing.
Dreamhost also lets you add sub-domains on their
dreamhosters.com domain. The sub-domain has to have a unique name across DreamHost, so you might have to choose a sub-domain like
dreamhosters.com sub-domain is most useful if you haven't yet decided on a domain to register, but want to start testing on a "scratch" sub-domain site.