But interview stress is very different than work stress. It doesn't seem to translate well. Some people do fine during the interview and then crack under real pressure, and some people it's the exact opposite.
I've changed my interviewing to involve very little coding. I might do FizzBuzz on the phone screen just to weed out the folks who really can't code anything on the fly, but that's about it.
After that, most of my interview is me explaining some real works tasks that they would have to perform, and then asking them how they would try finding the solution and if they have ever solved a similar problem in the past, and if so, how. I also ask them about difficult problems they've solved, how they solved it, how they found the problem, etc.
My goal is twofold -- try to figure out how they research problems they don't know the answer to, how they investigate issues; and give them lots of examples of what will be expected so that they can bow themselves out of the process if they don't think it's a good fit for them.
This obviously works much better with people who already have a job, and are more likely to take themselves out of the process, but so far it's worked pretty well.