You might first-off ask for a portfolio. This should help you gauge whether their experience/taste/etc. is par with what your expecting from an employee.
Some of the things I ask when hiring ... And this is all off the top of my head so keep that in mind:
When creating graphics, what do you feel is the most important aspect: Planning, design or implementation ... And why?
When working in Flash, what is a reasonable timeframe for say a 800x100 px banner?
When creating graphics, when is 'eye catching' "too much"?
In the past, what was your favoite project and why?
What is your experience with CSS and do you find it superior or inferior? Explain why.
CanadianChris, consider this: If you don't know about the position you're hiring for, you might plan some really off-the-wall generic questions. Try to catch them off guard with maybe some humor and then drill them again with relevent questions. Test how the take 'relaxed pressure' as I like to call it. The more explaining they can do, and the better they handle it ... either 1) the more they know, or 2) the better they are at *BS*ing. This you just have to take a gamble on.
There are a few books available that I have seen for hiring graphic designers.