for me, one of the big features of templates engines is that the cache layer its transparent for you. I've been using smarty long time ago, and the cache stuff make the life easier. also the smarty design allow you to use your own cache function.
In my case I choose if for some page should use memcache or disk to store the template output.
in the other hand if your site has a big traffic and you dont know how to manage smarty and tuning it well this any template engine could be a site killer. but even not using smarty your site can die also.
flickr is currently using smarty. its shouldn't be soo bad, isn't?
