I used to use the Smith for squats b/c I was intimidated by the squat rack and barbells. No matter how I did them though, I always had slight lower back pains - no matter how "perfect" my form was on it (and I have no lower back problems overall). With bb squats, it has never done that. That makes sense though, b/c anything that is forcing the body into an unnatural ROM increases the chances of your body not liking it so much.
My sister was having the same issue, but was afraid to do bb squats. I told her to imagine if she taped a marker to the end of a broomstick and did a squat next to a wall - what did she think the line it would make would look like? Completely straight? No. She hasn't used the Smith since, and has had no more back pain.
I don't think it's the worst contraption on Earth or anything, I just think there are far superior ways of working out.