currently i'm doing squats with a smith rack because my gym (a quite small cheap one in Korea) doesn't have a power rack. Is it better to be doing squats with a smith rack than to not do squats at all? I'm thinking about buying a squat rack for the gym though.
That'd be your best bet. There are many reasons why not to use the smith machine- minimal carryover to free squats, strain to the patellar tendon, no balance/stabilization, etc. They suck.
alterative is lunges with a bar,stationary step forward push back ect...I get great pumps and cut with them then squats and adds balance and strenght too....Squats are probably much better for over all power and strenght....
Hope this helps....
Edit: If you are seriously thinking of buying the gym a Power Rack then do it. Your karma will be almost immediately returned in the form of better musculature.