You have a very good GPA and IELTS is good enough to secure an acceptance. You can try the top universities Toronto, UBC, Waterloo, Alberta. There is very high chances of acceptance.
I would suggest you to take a masters as it can help you in justifying your need to come to canada for higher studies also, it guarantees you a PR as you get 3 yrs PGWP.
A 1 year diploma is not the right thing to do with your GPA as you can get research masters (MaSc) from university which will cost you least 30~40% lesser than what you will spend on a diploma.
Also since you are from mechanical engineering there is another advantage of masters, which is the engineer's license. This is applicable only for Civil, mechanical engineers. This license is required to get jobs as mechanical engineers. All companies prefer people with this license. You need not start at entry level positions if you have this.
You will be automatically awarded this license if you graduate with a university masters, you won't get this in a diploma.
So in terms of cost, securing a PR and jobs.. a masters can give you the best opportunities.
All the best