Using Drush site-install with multisite and a single database
this is how I do mine...

drush -y site-install standard --db-url=mysql://$username:$pass@127.0.0.1:3306/$dbname --site-name="$sitename" --sites-subdir="$sitename"

sitename for instance could be test.drupalserver.com and to keep it in good practice for dbs i strip out the periods and the $dbname would be test_drupalserver_com.

I believe the way my drush command works, it creates a new db that matches the name of the site.