Ours do - my daughter is very small for her age and has a few issues, her TA in reception last year (she's just started year 1) would pick her up and hug her most mornings and I would regularly see the teacher with a child on her knee, holding their hand, arm round them etc.
I personally think that although the teachers have to be careful these days, I think it's lovely, all my girls love hugs and I would hate to think they couldn't get one when they needed one.