I wrote Mastering Pretty Permalinks in WordPress with the intention to introduce the concept of the best permalink structure for WordPress powered websites. This was a call to try to encourage people to organize their website, but beware of how the permalink structure might be overrode if you have a file folder name the same as a post and you are using the post name permalink structure.
It is obvious that I am going to say that the post name (formerly known as pretty permalink) structure or the /%postname%/ option in your WordPress Permalink General settings is the best structure.

However, I am going to go a step further. Search Engine Optimization is fun to play with in regards to your domain’s URL structure. It can be a way to optimize what your article is, other than just organization.
What we know in basic WordPress use for structure purposes are as the following:
Permalink Structure for Posts
We can control how our permalink structure can look whether by post ID, month and date and more. We can even designate tags and categories to these posts and call them to pages using custom WordPress queries. For example you can call a category and show only tags and a certain number of many posts.
The reason why the post name structure (/%postname%/) works best for a post is because it shows the post title closest to the domain, showing how important it is to the site. The structure within the web page itself will also emphasize this using heading tags (h1, h2, h3, h4, and so on.) Now, if you listed by category (and I have seen people recommend that), depending on how your category is labeled, you are telling the search engine that the category is far more important to crawl than the actual title of the post.
WordPress naturally has the base “category” as a name and you can group posts under those categories. It is okay to display your posts on your site in a category. Most people believe including categories makes your posts duplicate content. NO! It is only if you are posting the same thing again on your site or the same exact thing on another site (like if you do guest blogging.) The search engines are not dumb.
Now, here is the fun part as well as the tricky part. What if you do use the category structure? How can you make it clever enough to draw more attention to your title. WPCandy actually exercises this clever way by naming the category’s slug an action. Yes, just the slug as you can designate a different name pointing to a different slug.
Just some examples:
News is reports
Opinion is thinks
Tutorials is teaches

Pretty cool, huh? As a note, the posts do group under the general “category/category-name”.
In this, we are telling (using the WPCandy example) that WPCandy.com reports such and such title, giving it an actual sentence. And you know, it nearly makes this former English major cry happy tears. (Oh I am such a geek!)
Permalink Structure for Pages
Pages are kind of fun and since WordPress 3.0′s menu addition, your control over pages has increased with several options. You can use the older hierarchy structure with parent and child pages. Remember, pages in WordPress are normally known for being used for static content.
The older hierarchy structure adds the slug of the parent page into the URL structure. SO, if you have like a parent page and then three deep into children and grandchildren, your URL structure might get a bit long. That might not be a good idea for search engine optimizing as it takes away the importance of that page.
However, the hierarchy structure is not the only way. You can use the WordPress menu option in your WordPress administration (Under Appearance>Menus) to organize your website and keep your URL structure for your pages simple. You can publish a page without using the hierarchy and use the WordPress 3.0 menu to organize your website without adding more length to your page’s URL structure.
Now, both methods can be used and Google will pick up and group areas of your site that have been optimized as a group. For example, if you have defined that your main sections of your website are your ‘About’, ‘Contact’, and maybe… as an example say ‘Resources’, like I have here in Blondish.net, Google will pick up that structure if you do have a set up pages that are relevant to that main area.
As a note, We can also apply these techniques to custom posts types since WordPress 3.0.
In Summary
Your permalink structure is both a way to organize and help search engines, but can also be great in helping your visitors navigate your website. The best permalink structure to use in WordPress is one that is the most coherent for search engines to deliver the best results to potential visitors. Play around with your site and see what is best for you.