Another consideration is how you actually convince your prospective hire to join the company: particularly in a startup, the sort of person you want to hire is very likely to have multiple offers to choose amongst. When interviewing someone like that, I think it's important to realize the person's calibre quickly, and then to try to use the interview to show them why they ought to work for you -- in that situation, routine written programming tests probably work to your disadvantage.
You do have a point there. first of all, I work with Auston, the one who posted this threat. I think that making the decision to join a company has to do more with the people and vision of the company I'm interviewing with. At the same time I think it would be nice to show them my skill set. I'm have been a consultant for a long time now and there have been times when I didn't want to do business with the other company after the initial meeting and other times where I had to proof myself to the company before we could have a deal together. I think we approached the interviews pretty good. We set up a very relax atmosphere and talk about more than just programming and skill stuff.