Version Control with Subversion recommends the following layout for (single-project) repositories (complemented by this question):
/trunk
/tags
/rel.1 (app
I think flexibility and avoiding ambiguity is your answer.
By using version numbers you do not tie yourself to where that version is deployed.
For example you might have version 1.3 which is deployed as development, 1.2 which is in test and 1.1 which is in production. If you wanted you could easily add another staging environment for another version without having to change your subversion layout.
Nobody can argument what version 1.1 of the code is, but "production-stable" version is ambiguous.