If those people really "sailed" through your phone interview and technical discussion there is something very wrong with your phone interview format and technical discussion methods.
That's a good point, and I don't really understand what we were doing wrong.
I guess the candidates could 'talk the talk' when we were asking them questions on their CV, or general high-level questions on, say, threading or design patterns; but when it came to the crunch they couldn't write code.
Maybe the candidates were just good at generating CRUD applications and binding data to forms, and have rarely needed to process data. Not denigrating that aspect of software developement at all - it's just not what we need in our department.
We used to ask people to right a function in C that converts an array of doubles from degrees to radians. It was amazing how many people had no idea and who had sailed through CV/resume screening, telephone interview, and 'technical discussion' part of the interview with ease.