Our interns aren't "billable", but there's always plenty of work to be done to support the people doing billable work. Last year, one of our UIC interns wrote (in what I believe to be his first ever actual start-to-finish "program") a programmable symbolic process debugger for OS X, in Ruby:

  http://bit.ly/13kxv3

Nobody paid us to do that, but that debugger work is now Ragweed, our house debugger, and we've got it working under Win32, Linux, and a couple embedded platforms. It's extremely useful. And we scored an excellent blog post out of it.

(Timur works for us full-time now, of course).

I don't have to compromise the work we deliver for our clients to put interns on useful projects. And we're a special case: we do hard core programming work on a billable basis. Most of the companies people talk about on HN don't have that problem. There's a million useful things an intern can do without jeopardizing product quality.