Hello everybody.
I'm developing a kind of a search engine, oriented to products and services for local users. For different reasons I want to create subdomains for each state of USA. As my own site is still mostly in my mind, to get an idea of what I'm looking for - you can look here Wisconsin fsbo houses or here Kansas listings (this is certanly not the best example of webdesign and usability, BUT those guys made EXACTLY what I need from the point of view of subdomains).
So my question is the following: how is it better to configure DNS and web-server to make the same way (I will use linux hosting). Truly speaking I know how to make it working for 3-4 subdomains but if we make 50 different independent subdomains - the maintenance and support will by very difucult.
Thank you in advance.

What I used to do for subdomains, is have some kind of wildcard in the DNS entries, and then do all further handling by the webserver. It's not too hard, it only requires a bit of configuration.
Here's some stuff from the apache wiki
And here's the actual documentation for apache v2.2
As to how to setup your DNS records, I know I've done it, and I can take a look at how I did it, but I'm not sure where to look right now.