On the alerts dialog page for a list, can the default change type be configured to be "New Items added" instead of "All changes" for everyone.
Can this be done through subnew.aspx which under the _layouts? Is it possible to customize it even?
Yes it could be done by directly editing the subnew.aspx page, but I tend to stay away from editing internal files for several reasons (like support from Microsoft). Although the approach mentioned by Kit Menke is supported by Microsoft, it creates additional burden because you have to maintain a copy of each layouts file and keep them synchronized in case they change with a service pack or cumulative update.
Instead I'd recommend the approach outlined here http://sharepointmagazine.net/articles/custom-page-security-using-sharepoint-delegate-controls with a DelegateControl.
Inside your DelegateControl you're going to check if it is invoked on the page you are looking for and then you can carry out e.g. a jQuery to toggle the selection of your choice.
I've been using this approach now for many years with SharePoint 2007 and 2010 without problems.
If you want to customize a file in the _layouts directory, take a look at How to customize application pages in the Layouts folder in SharePoint.
It looks like you would be able to create a copy of the _layouts folder and then configure IIS to point there instead.
As it mentions in the article, the changes are unsupported and may be difficult to maintain in the future since the files could be updated by a patch. That being said, you could probably at least deploy them in your solution file.
I also recommend the approach with customization via Delegate Control.
Steps for customizing Alert subscription pages (New|Edit):
You could find the working solution for customizing Alert subscription New and Edit forms in this post