As a former Waterloo co-op (and founder of a YC company), I'd have to say that the 4 month co-op program added a LOT of value. I learned more in each of those 4 month co-op terms than each of my school terms. Additionally, from all my interviewing experience (i.e. interviewing for full time hire's), those that come from a co-op program (any co-op program, even UofT's) are way better prepared and have much more practical knowledge.

This is a core reason why we still recruit heavily in Waterloo, for both co-op's and full-times. In fact, we're going to be in Waterloo on January 19th, 2012 for a tech talk with YC and a number of other YC companies. Please feel free to drop by if you're in town.