Over time I've made interview challenge problems progressively easier, as I've found that the trickier ones don't give any more information than the easier ones. My challenge now basically amounts to 'read this doubly nested for loop and tell me what it does', equivalent in difficulty to fizzbuzz.

If you can't solve that, even in the pressure of an interview, then I'm sorry, but you have no business working as a programmer, and I'm offended that you even applied.

And yes, people flunk it all the time.