I think you need both. You need to detect, and rectify, problems as soon as they occur. It's much better to catch potentially badly-fit employees (which doesn't mean they're necessarily bad, but just not right for the position you're trying to fill) in the interview process. However, there are subtle problems (people who can't handle large projects, or who don't document code, or who interview well but are actually unethical) that can't be caught in the interview process at all.

This is oddly similar to the compile/run time distinction in bugs. You want to push as many of your bugs to compile time as possible (not-so-subtle plug for static typing) but it's impossible to have catch all of them in compilation; such is the nature of bugs. Similarly, you want to catch as many problems as possible in the interview process, but can't get all of them.