I have both a Smart car and a Bugeye. Man, if you're really worried about an accident in a Smart car, what in bejeezes are you doing in a Spridget? The Smart car is highly rated for accident safety--don't get suckered into this "small cars are dangerous" nonsense that Detroit has always used to get people into their bloated ocean liners.
The transmission in the Smart is an automatically controlled manual transmission, with a dry plate clutch. It does lose power when it's shifting, just like my Bugeye. It's no big deal. However, to people who never have used a manual, it's not just like an automatic transmission, so they don't like it. I too wish they had a fully manual transmission (some of the European ones do) but the manufacturers know it would never sell well in the US.
They've done a lot in the car's design that took a lot of courage: recognizing that it's a small, niche car, doing what's most sensible technically, and not trying to make it all things to all people, which would create a compromised mess. Still, you can only go so far in doing this and still have it acceptable to the average technically illiterate American. So, in this light, the transmission choice makes a lot of sense.