You have to be conscious of the stage of learning your intern fits in and what motivates him. The first point will help your intern develop as a professional, the second will help you develop as a manager/leader.
I suggest reading on Pragmatic Thinking and Learning to understand the stages of learning.
Basically it says that there are stages of learning and work has to progress through them. The very first stages people need clear recipes with well defined contexts, they work by example. Then they learn to solve new problems, and later on they learn to optimize their work. So you want to find out where he stands and provide him work accordingly, else he won't learn.
So it's not wrong to give your intern monkey work, if you feel he's in that stage, if he needs to learn to read code, learn to speak your DSLs, to interact with your services/databases, etc. If the challenge is beyond his level he will fail, and some people have yet to overcome failure as a demotivator.
On motivation there is some good thoughts in Management 3.0.
The idea is that every person has different motivators on different levels. People seek challenge, money, status, freedom, power, gratitude, fitting in, standing out, etc all on different levels. It's up to you to understand what drives them and find a way to provide that.
I tend to think of it like an exchange currency specific to each person. If the person misses theirs, they start questioning if the company provides them with a fair deal. If my currency is status, but they only provide me money, I have to exchange money for status somehow in my life to feel satisfied, and I often lose in the exchange taxes.
On what has been said about the kind of work interns do, I will stand against the "real work" crowd.
Computer Science Bachelors often get bored doing "real work" on the enterprise segment. That's another thing you have to go by feeling. Some people like being academics, so you better turn them into a mini-R&D, get them to build tools, metrics, etc. Make them feel the scientists inside the corporation, don't let them crawl back to academia frustrated with the enterprise.
Other people are just looking for a chance to get out of the fantasy world of academia and are eager to learn the business.