It's best to use a directory structure too rather than passing variables on an index.php file or similar.
A directory is more semantically structured and can you can geo-target a directory a lot easier than something like index.php?lang=en.
en.site.com / fr.site.com
or
site.com/en/ site.com/fr
is the way to go. Be sure to the ISO Country identifiers (fr/de/en/es/it/jp).
I setup something similar a few weeks ago with Wordpress MU. I have an English and Polish blog running off the same system.
ammado blog +
Polski blog ammado