My current employer does sit-down interviews with the whole engineering team. When I was interviewed, I went through a phone screening, and then I was invited to an interview. It was two interviews, actually; one with engineering and another with admin.

Our engineers don't have a pre-set of questions. They asked what came to their heads, they picked at stories I told, they were interested in technical problems I had solved in the past.

I find we've dodged some bullets using this methodology, and the people we've picked up using this process have been pretty excellent and tend to gel well with the team.