Timing an internship during PhD
I think you're creating a false dichotomy by saying 


  the internship is certain to eat into vital amount of time he could
  otherwise spend thinking about research problems


Internships are places where sometimes REALLY interesting problems come up. Especially in engineering, while it's not critical, it's very important to keep a finger on what's happening in industry - the industry/academia divide is a matter of time-horizon rather than fundamental nature of the problem. 

Of course you need to have enough experience to recognize interesting problems, which goes back to @aeismail's answer. I will also say that doing it late in your career isn't that bad either, because then you get a three-month interview for a job. That's how I got my first one :)