Essential to the dynamics of semi-dilute and dense suspensions, the pair-wise hydrodynamic interactions between swimming microorganisms has been analyzed in several studies in the recent past. However, most studies have focused on the viscous regime, in the absence of inertia. We examine the effects of inertia on the interaction of a pair of model microorganisms in the small to intermediate Reynolds number regime, by means of direct numerical simulations. The results show that the increasing strength of inertia increases the wake momentum and leads to vortex shedding. The hydrodynamic interaction between microorganisms, coupled with their interaction with the disturbed fluid surrounding them, has a marked impact on the trajectories of the interacting swimmers. This causes a significant change in the contact time and dispersion dynamics of microswimmers, with potential important consequences on the collective behavior of microorganisms, as well as on decisive biophysical interactions such as same-species and predator-prey interactions.