Hyphenated domain names are better for SEO because the search engines can actually pick out keywords from the domain name URL - and some have said that weighs heavily in ranking. Personally, I think that the amount benefited is counteracted 100-fold with a quick and easy domain name that allows word of mouth to spread fast.

i just read in a book that it is not too good to dashes in your url because of your reasoning. It said your url should pass the radio test. which means if it was told on the radio people would remember it. my website dot com is easier to comprehend and remembmer than my dash website dot com.

Yeah, I like your analogy to a radio test. That's bad with DaniWeb because most people spell it Danny, unfortunately

This is just an opinion based on experimentation with both hyphenated and non-hyphenated domain names.

Google doesn't care whether a domain name is hyphenated or not, provided that the keywords are there. For example web-site-name.com and websitename.com will produce similar results.

MSN, however, absolutely loves hyphenated domain names, at this time anyway. That may change.

I suggest you take this concept one step further though, name web pages using logical naming conventions as well. For example, a web page named web-site-ptomotion.htm is much better than one named bunchoflettersandnumbers.HTML

Do this with graphics too, especially if you want your images to be searchable. Same theory, web-site-promotion.gif is way better than buchoflettersandnumbers.jpg . Throw in an alt attribute "Web Site Promotion". Provided that this technique is used sparingly, it can be effective in gaining additional weight for that page for the keyphrase.

But If I had a domain name www.samscat.com, how can Google know to separate it into multiple words without the hyphens? If it's a single word, that's fine, but for multiple words, there really is no way to separate it? Is it "sams cat" or "sam scat" ??

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Google returns results for keyphrase searches. If the search was for "sams cat" or "sam scat" google would separate www.samscat.com either way.

"MSN, however, absolutely loves hyphenated domain names, at this time anyway. That may change."

will have to agree with this statement.
But the hyphenated and non-hyphenated thingy only carries a miniscule weightage in the bigger scheme of search engine optimization and rankings.

I've seen some interesting results with hyphenated domain names on Google. Not sure how MSN / Yahoo or Ask handles this.

Domain name WidgetA-WidgetB.com has the tendancy to rank better for the query WidgetA WidgetB against a site assuming all other variables equal. The effect doesn't seem to appear on domains with two or more hyphens. And domain names with two or more hyphens are a poor choice for branding and establishing yourself long term.

Hyphenated URL containing keywords are definitelty good for SEO with a few exceptions.
Try not to be spammy.
For example buy-WidgetB-Cheap.com would actually have a negative effect on SEO, as it might be seen as an attempt at SERP spamming.

If you see yourself having more than one hyphen STOP!