Does Crawmerax drop better items when playing as a team?

Solution 1:

he does. the more people you have in your game, the more loot and the better loot everything will drop. its halfway why i love to play the game with friends :D

Solution 2:

Having a mod with +1 or +2 find rare items generally results in better loot than playing with another person without a plus to find rare, at least in my experience.

Mind you, having a team where everyone has a plus for find rare items (I've got ones for the hunter and the siren, not sure if ones for the others drop) would probably result in the best chance. :)