There has been the question as to whether or not hyphens or underscores are better for search engine optimization. Hyphens are easier for human eyes to read.
When doing a search in Google for the keyword “starting business” with hyphens and underscores the results varied. With the hyphen the two words were treated as separate terms. On the other hand, the underscore came back with a message asking, “Did you mean: starting _business”.
In effect, the underscore is parsed from the query so, whether searching with an underscore or a hyphen, the results are identical. The same holds true in other search engines (MSN.com, Ask.com) as well. Yahoo! still views the variations differently. That can be an advantage if you have low rankings for phrases using hyphens, as you can still have high rankings using underscores.
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I have always heard that hyphens are preferable to underscores. As you mentioned, the search engines tend to view the hyphen as a separator between words, so if you have a domain name of "mountain-bike.com" then it would be read like "mountainbike.com" but "mountain_bike.com" would be treated differently. Also, a good rule of thumb is to have no more than one hyphen in the domain name.