Problems are good, graded difficulty (don't want to discourage anyone with the first problem), solutions don't take terribly many lines of code. Low barrier to entry makes for a fun contest. Problem 2 is on par with a medium-hard ACM ICPC question, probably one of the harder questions I've seen in a startup-made contest. High five.
I have done a few of these puzzles; the ones I remember were for Quora and STA. Of those, this had least code and was quickest to write - it was fun to think about, but I didn't really learn much doing it.
In comparison, the Quora question involved various optimisations in C code (for speed) which was a bit of a time-waster - I think this tests a wider range of knowledge much more quickly. But my favourite was an STA question on inferring relatives from DNA which meant learning something new (high dimensional data; particularly locality sensitive hashing).
Personally I would prefer to see all the questions at the start, so I can see how interesting everything is, and how much time is involved. I don't really understand the advantage (to the people asking) of having them chained.
PS I find the spammy comments on this thread very odd. Are Hyperpublic themselves using sock puppets? That really makes you look bad.
Re the spammy comments, our entire team are longtime HN users so we all know those hurt way more than they help, but think one of our "fans" wanted to "help" a little too much. Love their enthusiasm though.