I have created several Smarty based application frameworks and they have been used to create hundreds (no kidding) of web applications by my company and my customers. I have trained several groups of programmers to PHP and after showing them Smarty I have always heard the question: "Why didn't you tell about this before?"
As for Vlad's comment "choose a good PHP framework... most of them ha ve a templating library" (well why not Smarty, then) and "...spent two hours trying to make a template". Sigh. The documentation is there, just read it. Understand it. The syntax is extremely easy. Well, one cannot really expect to learn a new environment in two hours, though and become 100% productive.
There are other good alternatives as well like Open Power Template http://www.invenzzia.org/en/home or Twig http://www.twig-project.org/development, the latter is lacking many of Smarty's advanced features, though.
Anyhow, I would never-ever start any project of any size without using a good templating system.
I have done my best to try to understand the Smarty-haters' motives but failed so far. Once I had to work for a company that refused to use Smarty 'because of performance reasons' so they created a 'more powerful' regex-based template system. Well, in complex reports their 'speedy' system took 8x the CPU time my Smarty based alternative did - and this without even optimizing the Smarty end or using bytecode cache. Moreover, we had to write much of the formatting code at the PHP end which made the code much more unreadable and harder to maintain.