Internship

Gives you a first-hand look at what life in a particular job or company is like.
Affords you the opportunity to make contacts with valuable insiders who may be able to help you network your way to bigger and better opportunities.
Gives you a leg up over others applying for a job at the same company.
Offers the chance to gain valuable skills that will assist you in preparing for full-time employment.
Usually provides some form of compensation, typically monetary or school credits.
Enables you to impress would-be employers with your on-the-job performance, something you can't demonstrate in an interview.

Disadvantages:

Some companies view interns as indentured slaves and provide them with little more than drudgework.
You may have limited opportunity to actually meet the company's "movers and shakers."
You may be stuck doing just one type of work in one particular department, limiting your exposure to the company as a whole.
You may not get paid for your efforts.

Define Your Goals and Career Map
Job vs. Internship
To Temp or Not to Temp?
What Kind of Company?
Picking a Location