Two more co-op arcade games:
Radiant Silvergun: Treasure's vertical shooter for the Saturn, supports 2-player co-op. The game is pretty unforgiving, so it's best to get some play time in to get extra credits or unlock free play before grabbing a friend. If you're looking for something a bit more accessible and polished, grab
Ikaruga instead (it's also
cheaper!).
Guardian Heroes: Another Treasure game ported from the Saturn, this time with updated graphics and art. It's a side-scrolling beat-em-up/action-rpg crossover, but the controls are more reminiscent of Street Fighter than other games in the genre. Average playthrough is ~45 minutes, but the game has branching paths and 30 stages in total, so for $10 it has a good bit of replay value. The story mode supports 2-players while the (nominally interesting) arena mode supports 12 players over Live.
Here's a review from Co-optimus.
Finally, I can't believe we didn't mention the Portal 2 co-op mode yet. Not that much replay value perhaps, but still a fun adventure.