I'm co-founder of a company called Looksharp that has helped thousands of startups hire interns. By the law you should add interns to payroll and pay at least a minimum wage (although there is a new court precedent as of two weeks ago, in California that might change this).
Outside of legal reasons, I highly recommend paying interns as it dramatically increases quality (which is essential at a fast paced startup), commitment, and it increases chances that an intern converts into a FT hire another huge value for a startup.
I always tell our interns -- "We are not going to pay you a lot, because we are a startup, but we are going to pay you because we value your work." I have hired straight A Harvard MBA's, Berkeley english majors to do inbound content creation, and even engineers (although $25/hour is more standard for this role) all at minimum wage.
To be eligible for a 1099 a contractor must be able to pick their own location and hours, which isn't true for most interns. That said, many internships are done like this and most are not enforced as the DOL usually has bigger fish to fry.
Let me know if you have further questions!