I'm an engineer who's been on both sides of the hiring process. The usual order that hiring moves in an organization is:
1) Any developers known to current members of the team
2) Developers known through associations or free industry meetings (most employers neglect this to their detriment)
3) Post the job opening on their site
4) LinkedIn posting
5) Craigslist posting
6) Monster and other paid sites postings
7) Hire a recruiter and pay the recruiter price
Meanwhile a developer looking for work will typically:
1) Ask peers and friends outside the company if they know a good spot
2) If there's a company they REALLY like, they'll check their site for openings. If your name isn't google, it's unlikely this is your company
3) Casually glance at LinkedIn messages, see a recruiter has been following them.
4) Maybe check craigslist or monster
5) Respond to recruiter, go to interviews
Because the candidate doesn't pay for recruiters, it's in their interest to let the recruiter do the leg work. But that's the last step a company wants to do. So there's a pretty big disconnect here.
For best results in hiring developers, I'd recommend
1) Asking any developers you know for candidates first. Developers are much better positioned to asses skill levels of developers.
2) Go to a developers group meeting. In the .NET world that's alt .NET, for other technologies it can vary. Check your local meetups and go there. This will give you some of the best in the area.
3) If you can at all afford it, hire a good recruiter. Good engineers don't stay out of work long in the current market, and unless you want recruiting to be your full time job you're at a disadvantage otherwise.
4) Good engineers are rarely out of work - so you need to either offer something most companies don't (equity), or you're going to be headhunting. Put the salary you're paying in your ad for this reason. Yes, you'll lose some negotiating room, but you'll get much, much better results. Instead of scraping the bottom for those who can't find anywhere else, you get the people who are ready to move up.