Before graduating from Waterloo, I had the opportunity to work in three different countries (Canada, USA, Japan), on everything from web services to embedded C. While I was a good student, and I doubt that I would have had any trouble finding a job with or without co-op, getting the breadth of experience was incredibly valuable - this would be something much harder to get after graduating.
I generally dislike competition of school brands (ie. Waterloo vs. Toronto), because I am fairly certain that education is 95% work ethic. The co-op program I firmly believe is exceptional, however.