Sure! Reasons why I recommend establishing web applications in their own subdomains:
You can more easily run different applications with different PHP installations (PHP4 vs PHP5). While I generally believe running PHP5 is best, some web applications you might want to run are not yet PHP5 “ready”, and you might not want to, or have the time or knowledge to, recode them. Running that application in it’s own subdomain allows your other stuff to still use PHP5 while facilitating the PHP4 for that application with a minimum of hassle.
As in #1 above, sometimes an application needs a “custom” PHP tweak or two - I find it easier and “cleaner” to do this on a subdomain level per application than to try to tweak a single PHP instance to be optimal for every application.
Many web applications rely heavily on .htaccess based re-write rules to manage their “pretty” urls, and using sub-domains makes it easier to avoid conflicting .htaccess files and re-write rules.
If you are a fan of “oneclick” installations on DreamHost, you can’t install a “oneclick” installation “above” other stuff in the directory tree, as the “one-click” installer requires “empty” directories for the target of an install.
Those are the main reasons I generally use subdomains for many applications; there may well be others and I understand, and respect, the fact that some may feel differently about it. As with most such things, YMMV!