After reading lots of blogs, forum entries and several Apple docs, I still don\'t know whether extensive subclassing in Objective-C is a wise thing to do or not
Personally, I follow this rule: I can create a subclass if it respects the Liskov substitution principle.
Delegation is a means of using the composition technique to replace some aspects of coding you would otherwise subclass for. As such, it boils down to the age old question of the task at hand needing one large thing that knows how to do a lot, or if you have a loose network of specialized objects (a very UNIX sort of model of responsibility).
Using a combination of delegates and protocols (to define what the delegates are supposed to be able to do) provides a great deal of flexibility of behavior and ease of coding - going back to that Liskov substitution principle, when you subclass you have to be careful you don't do anything a user of the whole class would find unexpected. But if you are simply making a delegate object then you have much less to be responsible for, only that the delegate methods you implement do what that one protocol calls for, beyond that you don't care.
There are still many good reasons to use subclasses, if you truly have shared behavior and variables between a number of classes it may make a lot of sense to subclass. But if you can take advantage of the delegate concept you'll often make your classes easier to extend or use in ways you the designer may not have expected.
I tend to be more of a fan of formal protocols than informal ones, because not only do formal protocols make sure you have the methods a class treating you as a delegate expect, but also because the protocol definition is a natural place to document what you expect from a delegate that implements those methods.
There's nothing wrong with using inheritance in Objective-C. Apple uses it quite a bit. For instance, in Cocoa-touch, the inheritance tree of UIButton is UIControl : UIView : UIResponder : NSObject.
I think Martin hit on an important point in mentioning the Liskov substitution principle. Also, proper use of inheritance requires that the implementer of the subclass has a deep knowledge of the super class. If you've ever struggled to extend a non-trivial class in a complex framework, you know that there's always a learning curve. In addition, implementation details of the super class often "leak through" to the subclass, which is a big pain in the @$& for framework builders.
Apple chose to use delegation in many instances to address these problems; non-trivial classes like UIApplication expose common extension points through a delegate object so most developers have both an easier learning curve and a more loosely coupled way to add application specific behavior -- extending UIApplication directly is rarely necessary.
In your case, for your application specific code, use which ever techniques you're comfortable with and work best for your design. Inheritance is a great tool when used appropriately.
I frequently see application programmers draw lessons from framework designs and trying to apply them to their application code (this is common in Java, C++ and Python worlds as well as Objective-C). While it's good to think about and understand the choices framework designers made, those lessons don't always apply to application code.