Also, one of the issues of providing an interview candidate with a computer is that some people are very particular with their environment.
For example, even if you let them use an IDE they are familiar with, maybe they really don't like using Macs. Or worse, they don't even use a qwerty keyboard.
In my company nobody uses an IDE, I use vim and the other developers use emacs or sublime. I think we all have our own little plugins/settings that we use as well.
Of course you could solve all of this by letting employees bring their own computer, although not everyone has a laptop either. To be completely honest, I really like the whiteboard but I definitely can see why others don't like it and get the impression I'm in the minority.
I was asked to write syntactically correct code in a specific language on a whiteboard with a time limit. That's very far from how I work on a daily basis. I could understand writing pseudo-code or explaining architecture but what possible data can you gather from how well I draw curly braces on a dry erase board?