This corner needs something major. The think I liked about the old 1BE design was that it had a scaled down metropolis-type podium (minus a few signs) with a huge tower. Don't freak out over the word "metropolis," it's good for attracting people.
As was mentioned earlier, the key is mixed use. I think this corner needs retail, entertainment and whatever else, but it also needs height. It needs a landmark structure that befits the importance of the two streets. Make Yonge and Bloor a destination instead of just the intersection that divides the city into quadrants.
I think there would be more demand for residential use than commercial use as far as towers go. Yonge and Bloor is extremely convenient. Being as it is in the heart of the shopping district, wouldn't a flagship retail complex of nice shops work well here? I bet it would work judging by the recent reports of high demand for luxury items and luxury condos.