I do a lot of interviewing (at my company). Here's other common misconceptions lots of candidates have:
* Quicksort is O(N^2) -- don't make that mistake.
* There are plenty of "faster than O(NlogN) sorting algorithms, but they're all special cases. (Radix, Merge on multiple processors, etc.)
* Hashing is not a panacea. Collisions are always worth mentioning.