Although Google said it does not matter if you put pages at deep level, it would be quite nice to put all category pages at level 1. I have not found a way to achieve it in Magento.
I have a strong reason to put sub category url at level 1 besides of SEO – Sometime I need reorganise the category hierarchy. If moving category around changes its url, the site will produce 404 error if the visitor visiting the site via bookmark or search engine cached url.
Magento takes care of product pages very well. It asks you whether to use categories path for product URLs. However, Magento does not ask the same question for sub category pages. If a sub category is at level 3 from root category, its url will be sub-category-level-1/sub-category-level-2/sub-category-level-3. That is too long. If you can make sure each category (no matter which category it belongs to) url identifier identical, why Magento not simply use sub-category-level-3 as url?