Yeah there are a lot of companies that take in trainees, temp. But dont expect the job to be gratifying or to be something you expect (i.e. programming). Most companies would not want to let trainees/temp to do actual development because once they leave, they have to spend resources in skill transfers and maintenance of the written code. So it doesnt make business sense. Trainees/temps often end up doing testing, documentation, support, mock-ups, etc. But hey, if you're an undergraduate, any of those stuff, no matter how boring/tedious, is still a good experience. Even full-fledged programmers should have some experience, if not a lot, in these areas.

Yes it is cheap labor, but I dont see any problems with hiring trainees/interns that are still in college/uni to do technical documentation, QA, or testing. Sure it is not as good as hands on programming, but the trainee do get expose and a chance to experience and learn about writing technical docs, QA and testing. These are valuable experience for a developer. A good software developer should know how to write technical docs, perform QA (even if it is just simple functional QA on the piece of function he/she has implemented) as well as unit testing their code. All these skill are things a developer/programmer needs to learn eventually. So learning it while you're a trainee/intern is not a waste of time.