I do this, and provide a subset of REAL input data and perhaps a sample of the expected output. This ends up showing capabilities for more than just minor singleton operations, and shows that someone can use the atomic units of programming (loops, recursion, functions, etc) to actually produce a result. The chosen programming task is one someone in the office recently had to tackle themselves, so there is a working benchmark to compare against. I give it to them ahead of time, before an in-person interview, and say tell them I'm not necessarily expecting a working program (however, that would be nice), but come to the interview having considered the task and be prepared to talk about it, or talk about their specific solution/implementation. I find this also helps communicate the kinds of tasks the company deals with, and maybe a little of the company culture.
