Number two grade is not quite so elegant, a little harder to work with and quite a bit cheaper as far as the whole wood sub floor is concerned. Whichever type you decide upon, be sure to specify common grade lumber. If possible buy from a lumberyard that stores the stuff undercover so that it will be seasoned and dry. On no account should you buy wood sub floor boards wider than 6 in.
For greater strength, lay the wood sub floor diagonally across the joists. Where two lengths must be joined just butt the ends together, but make sure the junction is over a joist. Otherwise you may find yourself with a rather springy board here and there with the loose end flapping in the breeze. Leave space in between boards - a small amount of in. is fairly safe.
Nail the wood sub floor boards down solidly to each Wood Refinishing Guys nails driven through the face of the wood into the joist at each point. If you're the type who likes to wear both belt and suspenders, it's not a bad idea to buy rosin coated nails for this purpose. They hold like crazy.
Some types of finished flooring can go down over a wood sub floor of 3/4 in. plywood. Nailing this stuff to the bare joists gets the job over in a very short time. There is a special plywood now recommended. Three-quarters in. thick, it has a layer of tough hardboard laminated onto one side and is installed with this surface facing down. There's a reason for using it: over the years plywood can be compressed when it's used as a wood sub floor and the surface can become a little bumpy. The extra tough layer eliminates the problem.