Is it good practice to cut a little nick out of
the joist, enough to lay the wiring for the flooring to flush with the joist
over the top? Is this detrimental to the structure?

Yes.
Cutting out a 10% section of beam at the top reduces strength by at best
20%.
What about routing a groove in the chipboard?

I've cut out the odd small notch in my joists for this purpose, but
always felt that screwing T&G chipboard across the joists would more
than make up for any weakness created by the notch. Am I dangerously
wrong?
Steve