My personal approach has been a mix of both camps plus some personality analysis.

The technical questions are good in order to evaluate a candidate's knowledge base. I do personally believe it's important to know what's happening under the hood so I usually throw some questions on that area. The sad reality is that very few candidates answer correctly and most of the ones that do have obviously memorized the stuff.

I then throw some practical questions in the mix. This allows me to analyze the candidate's thought process and his/her ability to solve problems and think outside the box.

The other thing I look at is personality. This is one of the toughest things to figure out since people looking for a job are usually very pleasing, lol. In the end what matters to me in this area is that they are team players with good communication skills.