It's bloated. I used it quite intensively a few years ago, but came to the simple realistation that it's far more efficient, and easier, to just use php to do what smarty does.
The argument of designer vs code is complete crap. The designer gave you a few html files? OH NOES! I as a developer am completely incapable of writing my php code to output the same markup! I must use a template engine!!11
Besides which, I'm yet to meet a designer who does use HTML and not Photoshop/Fireworks/etc to actually design.. then leave the markup to the developer.