That, a phone interview and an hour-long face to face interview is all we need to figure out if the candidate is a good fit. The programming exercise can be done in good time by the candidate, using their tools and with no pressure. The resulting code is a great indication of how well they know Python and Django and gives us a lot to talk about in the face to face interview.
I'm not sure why some companies need a gruelling 4+ hour interrogation style interview process. Asking someone to code on a whiteboard would be as uncomfortable for me as it would be for them.
Keep in mind that it's not all about your coding ability, it could have been your smell, arrogance, the way you talk, etc (not saying any of it actually applies to the author, these are just examples).
This post helps me sympathize with the angry SF-ians angry at all the techies.