Josh Smith isn't the problem for the Hawks. In fact, he is one of the biggest reasons they've been able to tread water without Al Horford. He is one of the most versatile players in the league, able to play both forward spots effectively and is by far the best two-way player Atlanta has.
The problem for Atlanta is that they don't have a legitimate superstar. They have everything else: a versatile, defensive-minded glue guy (Smith), an elite big man (Horford), a 20-point scorer (Joe Johnson) and a capable point guard (Jeff Teague).
Nowadays, though, you simply can't win with that model. The Hawks have a lot of very good players, but no great ones.
There's a reason Houston's Daryl Morey was willing to give up so much to get Pau Gasol. There's a reason the Knicks gave up three of their five starters last year to get Carmelo Anthony. To win in the NBA, you have to have a superstar.
They pay Joe Johnson to be that guy, but he simply isn't.
That is why the Hawks shouldn't trade Smith. Unless the Lakers decide to move Gasol, or the Celtics give up on Rajon Rondo, the Hawks will likely be turning one of their biggest trade assets into several lesser ones.
What the Hawks should be doing is biding their time, waiting for a player like Anthony or Gasol to become available. When that happens, having Smith to trade will give them a real chance to get their much needed star.
The one guy on the market now who can do that is Dwight Howard. It seems odd that Howard has shown little interest in playing for the Hawks since he grew up in Atlanta, but as of now, he seems to have his sights set on bigger markets. If Atlanta could convince Howard to stay, moving Smith and maybe even Al Horford for him would put the Hawks in real title contention.
Another player to watch is Deron Williams. If New Jersey realizes that he will leave (which is no given at this point), they will look to recoup at least some value for him. Few teams could put together a package better than Smith and Teague. All of a sudden, the Hawks have Joe Johnson and Al Horford flanking one of the league's best point guards.
The point here is that trading Smith gets Atlanta no closer to a championship than they already are. If they really want to maximize his value, they should hold onto him until they have the chance to get a true superstar. Otherwise, they'll remain in the second-round purgatory that they've been stuck in for the past few years.