Best Practice Advice: How to create an area for Projects

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As we are facing out SP 2010, we need to recreate some things.. Given that the nature of the current implementation was not created properly, I need advice on how to generally set up an area within SP for all projects. 

Currently (in SharePoint 2010), the general setup works as follows.

Main project site /sites/Projects

Each project get it's own "Subsite" out of a (very basic) template, /sites/Projects/ProjectDog etc. 

Each subsite has some document libraries etc. 

Each project gets added to a custom list. 


Now, from what I read, a subsite may not be the ideal solution. But, what is the correct method?


The above is really really basic, but ideally, we would want to include some approvals and flows embedded within whatever solution we end up using. 


Any insights?

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