Why use a Top Level Domain

I am trying to understand the use of Top Level Domains. Do they help from a SEO perspective? Lets say I have a US site and a Canada site. For US, I create www.foo.com and for Canada I create www.foo.ca. Does this provide better functionality, or is it better practice, than www.foo.com/us/ and www.foo.com/ca/?

Thanks for any insight given...
obautistaAsked:
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jppintoConnect With a Mentor Commented:
To start, probably the .com domain that you want to register maybe is not available, it's beeing used by others. The .ca is more likely to be available.

Next I would recommend that you read this article. It will answer most of your questions:

http://webdesign.about.com/od/domains/a/dot_com_versus_dot_biz.htm

jppinto
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