I totally agree with you. I think you learn significantly more from a start up. However, in order to secure a good future, the resume is quite important, and recruiters often want to see name brands in prestigious industries like Consulting. Wouldn't it be a better investment to first have these name brands on your resume, then go to a start up, and even if it fails, you can always fall back on the name brand, showing that you are still a viable talent?

Jun, very informative post you have here. If only recruiters and students could gain this insight on the value of unstructured internships, interns everywhere would be seeking more productive and engaging internships available with small firms, and recruiters would learn to value them more. Alas, choosing unstructured internships could potentially be a gamble, as an ineffectively run startup firm will offer little value to the intern if the owners and managers know just as much as the intern. At that point, it's really up to the intern to take it upon themselves to work hard and be a self starter.
I still believe that unstructured internships with small start ups are still the best though, as there are plenty more opportunities, but most people should be aware that they will only get what they willingly put into it, and that it is easy to slack off and waste a perfectly good opportunity.
Charles, to address your question, I honestly don't think its any harder to get an internship with a small start up than it is with a larger firm. For one, those heavily advertised internship programs draw a crowd of the most competitive students out there, making it more difficult to actually get an offer. Small firms on the other hand, can't afford the luxury of advertising and promotion, and thus many like you wouldn't know or bother to apply. As a result, many of these spots are giving to less qualified students or sometimes none at all. What it really takes is for someone to simply just put in the effort to locate these firms. Google, Yellow Pages, or sometimes, simply taking a walk in the business district and walking into an office that you might be interested in. Put yourself in the position of a client instead of a potential intern, and imagine how you would normally seek out these small firms for help. Then when you find these firms, it takes a simple email or inquiry to find out if they might have an internship opportunity available. Some of these firms might even be delighted at the fact that someone would want to intern with their firm and might even open up a spot for you. Altogether, I believe there are more internship opportunities available with start-up firms in general than with large corporations. Good luck.

I would actually like to add to my above post and say that when I first interviewed at the investment firm, I felt like "I don't know if I could work for her, this seems boring", whereas when I interviewed at the start-up, I thought "These guys are really cool and it's really cool what they're doing - I could learn a lot from them".

Yet, after the interviews and after I heard back from both positions, I went against my initial gut feelings and chose to work at the investment firm..... because, I thought it would look better on my resume - because I'm interested in a career in finance. And, yes that was the only reason for choosing the investment firm over the start-up.