I agree with everything you say. Whether someone gets this question right or wrong does not really tell you anything about whether you should hire them.
In my defense, at the time I was asking this question question I was fresh out of college and my company gave no training or guidance on how to interview.
Oh, don't worry. I'm not necessarily criticizing you in particular (I wasn't part of that interview :-) ). Its just kind of in the abstract sorta thing.
If anything, I'm trying to agree with your original post, and just kinda ranting a bit myself on a similar subject.
In my defense, at the time I was asking this question question I was fresh out of college and my company gave no training or guidance on how to interview.