I usually chat with a candidate about past experience or coursework. Sometimes I do a high level problem (no coding on the whiteboard, just chatting), to gauge his skills of looking at a problem.

We also have a programming test. Everybody is subjected to it. In the beginning (when I had to do it :) ), thought it was stupid, but now I find this a valuable tool to aid with the decision (we frequently hire people who did not finish the test). The problems are relatively simple. You get 2 hours alone in a room, a programming language of your choice, and internet connection (so you can search for stuff).