Here's the test I've used in the past:
Before the interview, I ask them to write some code to access an HTTP endpoint that contains exchange rate data (USD, EUR, GBP, JPY etc.) in XML and to parse and load said data into a relational database. Then to build a very simple HTML form based front-end that lets you input a currency and convert it into another currency.
I ask them to send me either a link to a repository (Git, SVN etc.) or a zipball/tarball. If the job specifies a particular language, then I obviously expect it to be in that language. If not, so long as it isn't in something crazy like Brainfuck, they have free range.
If the code works and is basically sane, that goes a long way to get them shortlisted.
During the interview, I'll pull the code they sent up on a projector and ask them to self-review it. If they can figure out things that need improving in their code, that weighs heavily in their favour. Usually this is things like comments/documentation, tests, improving the structure or reusability. If it's really good, I'll throw a hypothetical idea for refactoring at them and see how they think.
The reason this works is that, despite Hacker News/Paul Graham dogma to the contrary, "smartness" isn't the only thing that matters in programmers. It's actually fairly low down the list. When hiring programmers, I want people who are actually able to do the daily practical job of writing code, modest and self-critical enough to spot their own mistakes, and socially capable to actually communicate their decisions and mistakes to the people they work with.
I interviewed a guy who was intellectually very smart and understood a lot about CS theory. I asked him why the PHP code he sent me didn't have any comments. "I don't believe in comments because they slow the PHP interpreter down." Sorry, he can be smarter than Einstein but I ain't letting him near production code.