When conducting introductory 1 Star courses, I find it best to start with the capsize and wet exit. My personal feeling is that it gets the fear out of the way. Its kinda hard to teach the students when they are afraid of capsizing.
Getting them wet from the get-go should give them a teeny weeny bit more confidence. It wont crush their fears totally, but at least somewhere in their minds is the knowledge of what to do in event of a capsize.
However, coaching at certain places such as Paddlers' Gateway can pose a challenge. The launch site is small. Worse still, its in the wakeboarding/water-skiing area. So teaching the wet-exit there would be inconsiderate, since I would be blocking up the entire safe launching area. Also, the wake from the speed boat zipping around does add to the fear of the participants.
In cases like these, I just briefly tell the participants what to do in event of a capsize and get them paddling over to a safer, more condusive location.
But, what then if there's a participant who isn't really good with coordination and just cant seem to paddle straight?