Of course they are. Good developers are in demand and are rarely out of work (at least once they have some experience on their resumes). You need to make a case in your job listings and interviews that your company is a better place to work than wherever they are now, so that people who are not entirely satisfied with their current job will come to you.

I sympathize about not being able to find a lot of good people, but really, there are just not that many good people. I saw the same thing when I worked in a Java shop -- many candidates were really just getting by and hadn't given much thought to the pros and cons of the tools and techniques they were using.

I personally prefer to see code samples rather than give a test. I want to see what style of code people will use when working on real problems, including how they leverage CPAN and how they document things. I find that the usual concern of "Is it really his code?" is not an issue if you spend 10 minutes asking the candidate to walk through his code and explain his choices.