I took O levels myself and teach GCSE now. The core issue for me is what as a nation are we after when we get children to sit exams?
If it's because we want them to know a particular chunk of facts by the end of 2 years, then letting them resit over and over and take their exams in a modular fashion until they have that knowledge, is not a problem.
If on the other hand the main aim is to get them to prove their academic skills in a competitive situation so that employers can gauge their intellectual capacity, then the greater challenge of remembering and retaining 2 years of education is the better tool.
If both those aims are more or less appropriate for different children who need different outcomes for their future careers then possibly we do need 2 routes through the system.
From a teaching perspective I hate coursework- it is getting the kids to jump through hoops for the sake of it, and is hugely open to abuse. You can, within the rules, just keep handing it back until it is half decent and that seems to me to hugely miss the point. The modular system can mean that you are constantly running for a deadline and the resits are expensive and time consuming. In some cases modular deadlines and timetable restraints means the work is being presented in a very awkward order- our triple science kids are having to learnt part 3 of a chemistry topic before they have done parts 1 and 2 for instance.
On the other hand, I taught an year 11 flexible learning group this year - who were also doing 2 days a week at college on vocational courses like mechanics. Some of them had a target of an F at GCSE and there is no way they would have coped without a modular system.
Most of all I wish the government would pick a method and stick with it. I started teaching in 1999, and I am about to start my 3rd version of the GCSE. If this goes through I will be on my 4th.