Having been on both sides the interview process and going through hundreds of candidates, I agree that a code solving problem is a valuable gauge for the technical acumen of the candidate. In fact the best experiences I have had on both sides of the table have had a well thought out coding element included. The better ones had a more real world requirement and aren't so puzzle like (yes FizzBuzz is pretty simplistic, but it’s still a puzzle).

The biggest issue I see with this approach is the “On Paper” (white board applies as well) code. This is an unrealistic expectation. Unless you’re writing all your code on paper and this is a basic skill for your process, you've already added a factor that may push a normally fine developer out.

If language is unimportant, then process should be as well. Let the developer solve the problem in the best way they can, even if they do ‘Google’ it. You can use the amount of ‘googleing’ as another factor to evaluate.