I could never understand the advantage of using a templating system inside another templating system. Smarty has loops. PHP has loops. Did I miss the train?
It's adding an extra layer of work which is unnessacary unless you're handing templates to people who really can't do PHP. If your designers are working on the HTML use Smarty tbh.
I use smarty mainly for it's templating benefits. Also you can write your own custom functions to call from the template files if needed, I found this to be very handy.