I mean there is no question people do all kinds of stupid things and I can hardly believe people using phones with one hand while they try to park their car or back it out of a tight spot. But I think to claim hands-free is more of a distraction than a conversation with a passenger is a stretch. At a minimum, it would depend on the circumstances. Someone having a simple conversation on the phone with both hands on the wheel and their eyes on the road could certainly be less distracting than a screaming argument with a passenger.
As an aside, my favorite distracted driving story is about a friend of a friend going to work and seeing the woman behind him doing her makeup in the rearview mirror in stop and go traffic. A few minutes later the guy stops the car in traffic and the lady rear ends him. He looks back and sees her pulling her lipstick out of one of her nostrils.