I am planning a trip to Toronto and am wondering if 3 full days (4 nights) is feasible to see enough sights and say that I have seen a good chunk of what Toronto is about?

yes

Me thinks "wow" is not a fan of my home town!?!
Toronto is fantastic city with tons to do ...but figure out what constitutes a good weekend for you in a city. Museums, parks, waterfront, ethnic neighborhoods, shopping?

Ardie: I love Toronto! But, even so, you have to admit, 3 days(4 nights) is enough to "see a good chunk of what Toronto is all about"!

I keep getting the feeling that when I visit Toronto, I will be having tons of coffee at all the different coffee places (for some reason Toronto makes me think of Seattle), lots of window shopping, and people watching.

My friends also suggests that I go do a Niagara falls tour from the Canadian side.

Has anyone been on such a tour?

3 days is enough for a taste of Toronto, but probably not if you're going to spend one of those days travelling to and from Niagara Falls. I consider NF to be highly over-rated and very tacky touristy, but everyone I know who has visited Toronto from another country has felt compelled to make the pilgrimage. A better option, if you had a little more time, would be to stay a night in Niagara-on-the-Lake, visit NF (about a 30 minute drive away) and catch a performance at the Shaw Festival. NOTL is a bit twee, but it has some pretty B&B's, a nice lakefront and some interesting wine country to explore nearby.