I have always said it's an essential piece of safety equipment and I stand by that.
In terms of use - given that I am a warm water, tropical dive instructor I have carried a finger reel and a 1.5m DSMB for most of my dives and I don't find that bulky; the reel with 20m of line was clipped to a D-Ring and the SMB wrapped in the small bungee and clip that was designed to keep it well wrapped up. I appreciate that if you are wearing thick gloves and require a larger reel to operate it then it will be more bulky but there's always a way to figure that out.
I agree with the sentiment about location - we did have a problem in Thailand at one dive site where Jetski enthusiasts would use them (as per NWG's post above) as part of a slalom course but this was almost exclusively during a period of time when we were forced by the local authorities to tow an SMB throughout the whole dive, after a Thai lady was killed by a longtail at this dive site. The local police would fine us 5,000 baht if we weren't carrying one. The problem became so bad that we decided not to tow them and only inflate them at the end of a dive, prior to the safety stop, which is how we always did it.
One of the reasons was also similar to NWGratefulDiver's post - the problem with towing an SMB throughout the whole dive was that the captain of our boat only knew that we were in the water, he didn't know when we would be coming up. On the other hand, the sudden appearance of an SMB 4 or 5 minutes before the end of the dive was a warning that we were surfacing, and he was then prepared to protect us. It really works. Of course, you need an alert captain, who knows the dive plan and - well - you have one of those if you're boat diving, right?
In Egypt, pretty much all the big boats knew to avoid an SMB, even if they weren't dive boats, because the local authorities had undertaken a training regimen for all boat captains in the area. There were some cowboy exceptions (glass bottom boats, ARGH), but by and large it was a good plan. It meant that boats were at least warned of your presence.
Yes, it depends on location and yes, deploying an SMB may have endangered some divers, but I would bet it's saved many more than it has harmed. Pushed out to sea in a big current and no DSMB? Well, you are properly screwed.
For those that are having problems in environments where there are idiot boaters around, is there any mechanism for training or information? Signs at the jetty or leaflets given to boat owners saying: this means divers are under the water?
We all dive in different locations but it's not fair to say that SMB deployment is entirely unsafe and it's not correct to say that shooting up an SMB will always protect you from all boat traffic. In my world, and in my experience, which is of course incomplete, it has, without question, saved lives.
Cheers
C.