I'm surprised nobody has talked about pairing interviews in the comments yet. I spent years clumsily hiring developers crapshoot-style. I shared the misconceptions that people get so nervous during technical interviews that it obviates their usefulness and that it doesn't really matter if a candidate writes code or not during their interview. My current employer, Pivotal Labs, hired me after a first interview that consists of interview-y conversation and a short pairing exercise followed by a second full day of pairing with the team on an actual project.

I know pairing is sometimes controversial around these parts, but for interview purposes its benefits are pretty evident.