The point of templates is that it seperates logic from design. This comes in handy when you work on a large project and you have a couple of programmers and a couple of designers. Neither one wants to really worry about what the other is doing. What makes me so qualified to answer? Well, I work for a large project that wrote their own template engine, and work on that very principle, seperating logic from design. You may have heard of us. phpBB.

What's the point of templating with Smarty or similar? Well, for one, it makes things easier to maintain. Secondly, it can speed things up significantly, especially if you compile your templates.
OOzy: I would stick with an already written one, especially if your site is small. It'll save you a lot of headache on down the road. However, if you write your own template engine, you now know the code intimately, and can fix problems that arise. Your call. All of the template engines above are great. I've used both Smarty and FastTemplate, and which one you use is up to what your needs are. If your site or project is small, you might want to use FastTemplate as it doesn't have as much features that you will end up not using. I hope that answered your question.
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