I think both models have their strengths. I use C# quite a bit (which itself borrows some functional paradigms for LINQ, Func, etc), but it definitely has some limitations, especially when you need immutability. I have started using F# to fill these gaps, and thanks to the CLR interop is pretty easy. Debugging is pleasant as well.

Someone else mentioned Python/Coconut, which is another great combo that enables you to switch between functional and imperative styles as needed. I think this will probably become more common, especially in interpreted languages.