TDD is great if you can get it working in a tight interview time schedule - they can also reveal any misunderstandings of requirements before the actual solution is implemented!
On the flip side however, many interviewers have experienced countless folks who spend the majority of the interview time on tests and setup, only to run out of time on delivering the solution to the actual presented problem. When I feel like somebody's spending too long on these things I'll try to nudge them towards wrapping up the tests and moving onto the solution. You would be surprised though by just how frequently it's met with open hostility, by candidates with only 10-15 mins left in an hour-long interview and no solution started!