I don't agree about the hour. I've done a programming test that took way more time (partially because it involved learning an entirely new framework). It was at a company where everybody gets the same test (and everybody solves it in a different way), and then presents their code to the assembled programmers of the company.

I still think that is the best way to interview (after a regular interview to weed out the real idiots).

I think the real thing that's suspect, is simply having to send in your code, rather than presenting your solution to a group of programmers.