Absolutely! It's totally insulting to be asked to do busy-work just to prove your worthiness before even being interviewed.

A month or so ago I met some people from a company at a networking event. They were looking for people with my kind of skill set and seemed quite enthusiastic. I made it clear that I was only interested in freelancing but he said they were out to "get the best, whatever it takes, so freelancing is fine". So the guy I'm speaking to gives me his card and I email a few days later.

I get an email back, not from him but from HR so not a good start! And the email basically says "build us this trivial demo application just to prove you can program before we interview you" and to make it even more insulting links to tutorials in case I don't know what I'm doing.

I couldn't think of anything nice to say so I never replied :)