Whiteboards should be used for what they're good at: Visually explaining ideas/solutions on an abstract level.

They are terrible at compiling and syntax checking.

Theoretically you should already know whether someone can do the physical code part. That problem is largely solved for and don't require in-house interview.

In-house interview should be used for c̶o̶n̶f̶i̶r̶m̶a̶t̶i̶o̶n̶ b̶i̶a̶s̶ ̶f̶o̶r̶ a̶g̶e̶/̶r̶a̶c̶e̶/̶g̶e̶n̶d̶e̶r̶ determining if the candidate can think/design/solve for the domain space they're being hired into. A whiteboard is a really good tool for assisting in that.

When I worked at http://zipcodedownload.com we constantly used whiteboards to code. That, of course, is when we had a parent company. Now that we are independent its gone by the wayside. Don't like it as well.