Joint interaction is good for our military. We need the Army, Air Force, Navy, and Marine Corps to work together. Doing so prevents interservice rivalry from interfering with the waging of war and achieving victory.
Having consolidation is a bad idea. The reason why it's a bad idea is because different military branches has different demands on their enlisted and their officers. An example of this is how the Navy fights from ships at sea and not in broad fronts in the middle of the woods, which is what those in the Army and Marine Corps may do. Likewise, the Air Force perform strategic air operations (such as bombings,) air superiority operations, and close air support for the Army and the Marine Corps (when their aviation units or naval aviation units can't), but those same Air Force personnel don't usually fight from tanks.
This is no offense to any one service branch. Rather, the different service branches operates in different areas of warfare. Those different areas require different kinds of training and different kinds of equipment.
I would also like to add that ever since the Goldwater-Nicols Act the different service branches have been able to act much better in a cooperative fashion. The major armed conflicts that have proven this are the Gulf War and the wars in Iraq and Afghanistan. There were many soldiers on the ground of the Army that were saved by Air Force officers piloting the Warthog, and the Navy's hospital ships have saved the lives of not just servicemen from many branches but also many civilians as well.
While I think that there may need to be some better interaction between the service branches, I think it would be utter folly to combine all the branches into one service. It would not clear things up the way your co-worker believes it would. Rather, there would be still be four units that all share the same rank and hierarchy. That's the only thing that would be a de facto difference.
I would also like to know if the person you spoke with has any actual military experience. I have a few ideas with regards to making the military a better organization for waging war and saving the lives of servicemen, but I haven't served, and probably never will, and so defer most of my opinions on these matters to those who have. I think for those who have risked their lives for this country, such deference has been earned.