Structure URLs for SEO Points

[ops]

What’s the best way to structure URL’s for SEO points?

A number of people say that pages should be close to the root of the domain. So we could have:

xyz.com/product-one-keywords.html
xyz.com/product-two-keywords.html

and others say that a logical URL directory structure should be used, such as:

xzy.com/category/subcategory/product-one-keyword.html
xyz.com/other-category/subcategory/product-two-keyword.html

Which I prefer seo point of views.

Thanks in Advance.

[Savera]

Structured way is more preferred and easy way to see things. However there is nothing wrong in option 1 either. Rather than messing with url, one should give more attention towards content and publicity .