Many candidates with current jobs that they would like to leave are only interested in immediate hiring. They do not have the luxury to take several days off of their existing job for a tiny contract which might or might not land them a job that they might or might not prove to want.
Nearly all of the high quality developers I know aren't interested in contract-to-hire, I know I'm not at all. To many things can go wrong in a short contract window, and regardless of the reality, most immediate hires feel they have a much stronger connection to the employer.
I recently switch jobs and can say with certainty I had no interest in contracting or contract-to-hire positions.
Quitting a full time job for a new position is a big commitment on my part, and I'd like a big commitment on the other side of the table. Not to mention contracting gigs don't usually have insurance, vacation, or other benefits.
If it means a more rigorous interview that's okay with me.
It doesn't have to be immediate, but most high quality workers will not be interested in anything that requires them to spend a period of time without a full-time job. So whatever contract work you give them will have to be small enough that they can do it while still working a full-time job, or you will miss out on most of the high quality people.
All of you guys are imagining some sort of 6 month junky contract to hire situation. All I'm talking about is a 3-10 day contract like the article mentions.
An unemployed candidate can do a contract like that while evaluating other jobs and possibly waiting for other offers to come in.
An employed candidate can do the work in off-hours.
It also gives the candidate a way to see what kind of problems he'd be working with, and the quality of the code-base, working conditions, etc.
I think it's a win-win.