The goal of the problem solving interview is more to see the candidates reasoning process and less the ability to recall the problem and reproduce a solution. I like interviews where the problems are more open ended and the interviewer is active in the process and it's more of a discussion towards a solution and THEN coding or at least some pseudocode.

I've had interviews where I'll be asked some canned algo/data structures problem (some version of knearest, or longest substring) and then the interviewer will tune out- these are mostly lame.

This. I've also had co-workers hell-bent on building out over-the-top unnecessary solutions (albeit sometimes neat in a technical sense) to problems that already had existing solutions that we could have easily leveraged and saved lots of time (money). Being able to leverage resources efficiently so that you are able to get more done is valuable. Go crazy and solve big problems when necessary but don't be afraid of using Google or any other resource to get through the rest.

Exactly. Love or hate Goog/Bing, they are powerful tools if you know how to use them.

Before the ubiquity of spell checkers I never hesitated to pick up a dictionary to double check spelling or a definition. I've never thought twice to grab a text book, manual or encyclopedia to reference a subject I was familiar with but did not know by rote or fully comprehend. Memorization is a very useful skill, as is understanding & comprehension. There is no guilt or shame in not being omniscient.