No programming interview process is perfect, and the small homework assignment should be accompanied by due diligence on both sides — technical interviewing by the company, background research of the company and/or founders by the candidate, etc. Interpreting a small, reasonable homework assignment as a sign that the company only hires second-rate programmers is a fast jump to a very pessimistic conclusion.
That said, one recent candidate wrote us very angrily that he was pursuing N other companies and didn't have time to do any "silly" homework assignment. He claimed that the very-domain-specific, open-source project he maintains should be enough of a coding example. I felt that was fine; if he didn't want to spent a small amount of time to complete a small request from us (and possibly show off a little) and return the favor the time _we_, a company of <10 people, were spending on _him_, it probably wasn't a good fit anyway.