I asked about locale translation here Magento: how to translate action tag content?. At the same time magento has translation themes:
app/design/frontend/default/default/
app/design/frontend/default/french/
app/design/frontend/default/german/
If we can do translation in locale files what are design folders for then? (In case we have the same theme for each language). Or is it implied that I should use design folders only when I have different themes?
Actually, a single theme can contain multiple translation locales. The following would be perfectly possible (though obviously not advised):
app/design/frontend/default/french/locale/de_DE/translate.csv
Storeviews are often used for switching between languages, because it is quite easy to set a locale on store-view configuration scope from the backend.
To answer your question more direct, I would suggest that you:
This leaves you room to do overrides in non-default themes at any later point.