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Search engines aren't good at completing online forms (such as a login), and thus any content contained behind them may remain hidden, so the developers option sounds like a good solution.
You may want to read:
http://www.seomoz.org/beginners-guide-to-seo/why-search-engine-marketing-is-necessary
From my understanding subdomains are considered completely separate from root domains unless you have a 301 redirect or conical that tells search engines you want them to consider the root or the subdomain to be the same; for example, http://www.yourdomain.com (subdomain) points to http://yourdomain.com
Therefore, you could have a subdomain out rank a root domain, or in your case a root domain penalized and the subdomain continue to rank well. The fact that they share an IP address shouldn't affect all the domains under that IP as many websites are on shared hosting which use the same IP address.
You should change it, I'm no canonical expert, but the whole point of having it is to tell google how you want it to show, ex. www.yoursite.com or yoursite.com. If your not going to change it for all of your pages then at least do it for your home page as this is the one that usually gets the most attention.
From my understanding subdomains are considered completely separate from root domains unless you have a 301 redirect or conical that tells search engines you want them to consider the root or the subdomain to be the same; for example, http://www.yourdomain.com (subdomain) points to http://yourdomain.com
Therefore, you could have a subdomain out rank a root domain, or in your case a root domain penalized and the subdomain continue to rank well. The fact that they share an IP address shouldn't affect all the domains under that IP as many websites are on shared hosting which use the same IP address.
Search engines aren't good at completing online forms (such as a login), and thus any content contained behind them may remain hidden, so the developers option sounds like a good solution.
You may want to read:
http://www.seomoz.org/beginners-guide-to-seo/why-search-engine-marketing-is-necessary