Yes, the interview candidate must be prepared for the interview but so should the interviewer. I had two interviews that were painful – mainly because one or more of the interviewers were not prepared.
When that happens, it sounds like the prepared packet of interview questions is just that – routine and meaningless without context of the hiring organization. Other times, interviewers try to counteract their lack of preparedness with talking. More specifically, their own. Very early on in my interview process, I had one particular telephone interview – an hour in length – in which I was literally asked only four questions – and not very good ones. The best you can do in such situations is share as much of your strengths as possible in the context of the questions (if you really want the job), or close the interview as fast as you can. Honestly.
Yes, the first interview is your first impression of me as the candidate, but it is also my first impression of you and, ultimately, the hiring organization. Preparation is key – for both parties.