I would amend "Don't hire friends and relatives" to say "don't hire people you can't fire" - I've had good luck with friends and relatives; but I've only hired friends that do jobs that I know how to do (and thus I know how to judge) and I seem to be able to say 'this isn't working out' without loosing a friend.

maybe "Don't hire people you are not willing and able to judge in an objective manner" would be better still.