I don't know about putting on the subfloor, but I would be really concerned about the cabinets getting banged up when the flooring is being installed and how the flooring will butt up to the cabinet. I wouldn't want a seam where water could run down the cabinet onto the edge of the flooring - seems like a potential for swelling. Does he say why he wont wait until the flooring is installed?

in any case there is a toekick space... this is where a piece of mdf (trim) can be added... it is easy and painless.

I'm concerned that if, in the future, someone wanted to change the cabinetry, they would be shocked to find subflooring under the cabinets. I worry that this is not good enough quality.

I don't see this as a big issue and is pretty standard practice, particularly in new construction. Particularly with wood floors, I don't see a problem with them getting messed up during floor installation. I also would not worry about the next instal of cabinets, with that logic you should be happy as someone someday might want to put in different floors and now they don't have to worry about taking the cabinets off to do it ;-] . The only time I have installed the flooring before and ultimately under my cabinet in a bath is when I use vanities with furniture legs that are open below (you can see the floor underneath). I also did it in my kitchen so appliances would sit on the floor so If i have to get a new dishwasher or fridge they can slide right out without busting up the tile. Bathroom, not a big deal, and will save you a few bucks.

I opted to have the tile floor and tile wainscot (42" up the wall) installed before the cabinets for 2 reasons: #1 if I ever decide to change out the vanity cabs, I won't have to change out my expensive tile job, and #2 if I have a leaky faucet or sink in the future, I don't want it to drop the drywall ceiliing below on the first floor on my bird's head (it happened once before, before we got the whole house replumbed.) It would have been a bit cheaper to only run the flooring/surround up to/around the cabinets, but it would have reduced my future options and would have reduced the chances of containing a leak to the immediate area of the leak. Just my choice/opinion - YMMV.

I always tile (or floor) all the way under cabinets. Reason #1 is to make it easy to change cabinet footprint in the future. Reason #2 is that the cabinets aren't "sunk down" below the tile, thus being shorter than their advertised height. Reason #3 is that it's not that much more work to go all the way to the wall.

Either way is acceptable, IMO. I've had flooring go under the cabinets that left for a mess when wanting to change the flooring. I've had flooring that stopped before the cabinets but never had an issue because changing out cabinets happen less than changing out flooring. At least in my world.

Thanks for all the advice. The cabinets are going on the subfloor. My contractor said it was common practice and by the time someone wants to change the cabinets, they will want to get rid of the floor too. We are using (not very expensive) bamboo and will keep extra pieces for the future.
So far all the work the contractor has done has been really good quality so I will trust him.

I prefer that the cabinets to be installed on top of the finished flooring. It's more critical in a kitchen installation than a bathroom one, but there are more good reasons for it to be done this way than the other.

Tobler-- usually, when the time comes to change the vanity, it's also time to change the floor, anyway. if that's the only thing holding you up, I'd let them put it in.