Does Google prefer hyphens or underscores?

Senior Google guy Matt Cutts has recently confirmed that it is still preferable to use a hyphen instead of an underscore when naming files or web pages. Google will read a URL such as www.freshleafmedia.co.uk/corporate_web_site_design.html and conclude that the page is about "corporate_web_site_design" not "corporate web site design". In the former example, corporate_web_site_design is treated as a single word (one that no one would ever for search for) whereas the latter example will give Google four separate key words to chew on plus a whole phrase "corporate", "web", "site", "design" and "corporate website design".

In the long term Google may be looking into interpreting the underscore character as a word separator but for now the advice is still definitely - don't use underscores!