Which Type of Bike is best to install a hub motor into??

Strong, strong, strong!!!!!

My view is its best to use the strongest frame you can, and also strong rims. So thats means steel type frame and steel type rims!!!
You can use aluminium rims and aluminium framed bikes but they will present some of their own difficulties in install, and also will simply not be as strong as using steel type. Also aluminium is brittle, it will easily crack if bent a few times, steel frames are malleable, they can bend alot!! and are very hard to crack or fail. One very big pot-hole in the road and you can damage an aluminium frame/rim, whereas steel will be more likely to survive a hard impact. Also if your using sealed lead acid (sla) batteries you need a strong bike to take the extra weight (my friend Tony from surfers was using 4 lots of 20ahr sla batteries on a mountain bike with a 408 motor and  he's not a light guy, it was a steel framed mountain bike, I wouldn't try that on an aluminium bike)

Postscript: I've had a bit of a change of mind in regard to steel rims, although they are stronger and more resistant to getting dinted (eg going over a bit pothole), aluminium rims have amazing braking ability compared to steel rims. If your using sealed lead acid batteries the bike is going to be heavy and good brakes are essential, one solution is to use aluminium rims with caliper type brakes. There is a huge difference in braking power with aluminium being far superior to steel rims.

Suspension, suspension,suspension!!!!

I recommend that you use a bike with front and rear suspension. The reason being the added weight of the batteries and to protect your rims from damage. At the moment its very easy to get sla (absorbed glass matt type) batteries and at quite reasonable cost. These sealed lead batteries are heavy (eg one 12ahr sla battery (now commonly being called 'bricks!' weighs about 4kg, three or four of those and you've got quite a bit of weight).
(Nimh and lithium are available but expensive).
So if you hit a decent bump the suspension is going to absorb alot of the impact, instead of your rims and frame. Also I think if your using sla batteries its best to mount them on the top part of the bike, if you mount them with the lower part of rear wheel, there is no protection of the rim from the extra weight of batteries. I really dont find a high centre of gravity a problem, except for parking the bike as the stand usually wont work anymore once sla batteries are installed.

Why not install on the front?
One reason is that its hard to get motors that will fit into the front (exception is crystalyte motors that are made to fit the 10 to 10.5cm width between most front forks). Also their is a huge difference in the quality of front forks ( talking about suspension type really here), unless its a very high quality set of front forks there is a real possibility of the  forks becoming loose in their operation from the additional stress and weight of motor and batteries.
Front forks without suspension also need to be quite heavy duty type, aluminium front forks with no suspension are a definite no go.
Further mounting in the rear is putting the motor in a place where the frame is generally stronger, the front forks by their nature are made of two parts sliding past each other (suspension type), the rear is frame with no moving parts and by its structure is generally stronger.

Whats wrong with using Aluminium Frames?

They can be used but they are simply not as strong as steel. Some would disagree, but I think the real strength of steel is its ability to bend, aluminium just doesn't bend without causing weakness. A bend in aluminium will leave a weak spot which may crack and fracture.
The other issue with aluminium is installing a rear hub motor. All the island earth motors (all rear motors) are slightly wider than a normal rear bike frame (as they are made for chinese market), so its necessary usually to bend out the rear frame by some amount depending on the motor, in order to be able to install the motor (or the brake thread can be removed from the motor meaning the frame doesn't have to be bent out). You really cant bend out an aluminium frame by much at all (only a few millimetres), whereas a steel frame I have spread them out by up to a few centimetres without any problems.
The crystalyte motors will fit into a normal bike (about 13.5cm distance across the rear dropouts) so they are more suitable for use with aluminium frames.
The other issue with using aluminium is the slots where the motor axle goes into the bike frame. One thing that has to be kept in mind is that these motors produce are very large amount of torque especially where the axle goes into the slots. If using aluminium frame it will be 100% necessary to use torque arms to stop the axle spinning in the frame. Having an axle spin in a frame is not good!!! I had it happen a couple of times when I first was messing with hub motors, what happens is that once it spins in the slot the wires that go to the motor twist around the axle very quickly, this means a very big strain on the wires and they may break or pull out of the motor. If they pull out of the motor can mean opening up the motor and replacing the wire, not much fun !!!!!
Most motors these days will have torque washers with them which provide some protection against the axle spinning in slot, but with an aluminium frame thats really not enough, the torque washers can dig into the aluminium dropouts as its softer than steel, so they dont give much protection, so its necessary to use a torque arm and torque washers. Also your putting alot of strain on the dropout area itself using torque washers and I don't think aluminium in the long run is suitable for those stresses. Unfortunately I dont have a style of torque arm that can fit any bike as the slots are all at different angles, so theres a bit of ingenuity involved in setting up the torque arms. I hope at some stage to make a torque arm available that can easily adapt to each situation.  Also if using an aluminium frame I think it would be necessary to have a torque arm on each side of the motor so that one side of the frame is not getting all the force applied to it, so theres twice as much work there to set the torque arms up.
The design of the torque arm to do that is not really an issue, its whats involved in getting some one to make them that is very difficult as there would be quite a few bits and pieces involved. (Presently I only buy/supply things that are already being produced.)

Conclusion: best type of bike to use?
1. steel frame
2. thick steel rims ( for excellent braking aluminium rims will be better, double wall aluminium rims are strongest type)
3. front and rear suspension

The bike that seems to fit this description best is a steel framed mountain bike with front and rear suspension.
(some recumbent bikes would also quite suitable).

I think if lithium batteries ever become a reasonable price ( seems there are a couple of safe versions around now) then non-suspension bikes are quite ok, of course the reality is you can pretty much take any bike and with some effort convert it to electric power and it will be get you moving. But i'm really thinking about the safety issues involved with the above discussion and in my view a strong steel framed mountain bike with front and rear suspension is the best option.
You can buy quite reasonably priced mountain bikes at the big retail stores (kmart, bigw etc), they certainly wont be the best quality bikes, you will probably have irrating problems at some stage but it isn't a bad way to start. Also a steel rear carrier which can handle alot of weight will most likely be required, that also can be an issue as most mountain bikes with suspension dont have a rear carrier or have one of those ones that connects just in one place under the seat. So I'm afraid its going to be up to your ingenuity how you mount the batteries, there are certainly plenty of options, heres one way I mounted three lots of 17ahr batteries on a mountain bike, it worked quite well, high centre of gravity was not an issue (believe it or not!!!), the only issue was balancing the bike against something when it wasn't in use.

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