Why not both? If the site gets popular, you run the risk of squatters taking the alternative (.co or .com) and hosting ads/malware, etc. Something to think about anyway.

I haven't seen any studies that .co is worse or better than .com. My gut reaction is that most non-technical people assume ".com", so if they see "www.example.co" they would type "www.example.com" out of habit and/or thinking the .co was a typo.

That's if they know the URL in the first place. I would bet most people just enter the "example" part in the address bar and assume Google or Bing will do the rest for them.

No.