In your experience, do end users understand .co or do you think they'll try to type in the .com version instead.
Assuming you are startup where company name is product name, I think the more important thing is to be able to get the matching twitter and facebook ID, if you can get same same as what you are targeting .co for.
.Co can rank better than .com. Just go to google.com and type in " Charlotte Church" or "bmr" or "i3DTV" My advice to you do not listen people whose mind is not flexible. If people like this govern this world we would have one brand of shoes, car, computer etc. Apart from that they never successful as success require seeing things before they come. if you want you cant contact me at mmaryni at yahoo.com
Good luck