Just a few notes on my experiences with templates:
I have the privilege(?) of being the designer, programmer and marketing person for a medium sized company European company that provides its website in 7 languages. I took the approach of using fast template for the current incarnation of our site.
I took templating to the extreme level by removing ALL content/text from the templates so that I could use a standard set of templates and programmes for all 7 language version with all of the language translations stored in a set of config and 'include at run-time text' files.
This meant that the people providing the translations had simple files to translate and that I instantly divided my support problems by 7 - I was only solving the problems once for all versions of the site - thus fixing all 7 versions in one go.
There is no way I would ever have finished the 7 versions without templating.
Fast template and all of the including I have to do does add a slight load to the server - but the benefits in the development/maintenance are well worth the extra couple of milliseconds per page.
I don't think I would ever consider doing a large PHP project again without using templating - just being able to seperate the different 'mind-sets' (programmer/designer) helps no end.
I am currently rewriting the site using Smarty - its template compiling and caching functions remove the whole server load issues - even speeding up site a little - and its extra 'ready to use' built-in functions make the actual programmes simpler.
I agree that Smarty does make the templates more complicated for the webdesigner ( but as this is me too there is no problem for me :-) ) - but as I am switching from a tables/pixel.gif based layout to a standards based CSS layout the templates are producing nothing more than well structured text documents.
Now if only I could get a three column layout in CSS to work properly...