Yep, the gas pedal is key. If you're in 1st and have your foot off the gas at 5 mph or so, expect the bucking bronco ride. It's pretty much like any other manual transmission car with the clutch engaged and the engine at idle, jerking along at low speed. The smart has less weight to dampen the effect, so it's probably a bit more noticeable in the smart than larger manual cars/trucks.
So, as others have said, in low speed conditions:
1) Run in manual mode (I do nearly 100%) so you can force the gear selection and not let it change inappropriately during low speed crawling.
2) Keep your distance from the car in front of you to the point that you can leave it in first and give it the smallest amount of gas possible and it will smoothly cruise at low speed (5-10 mph). If it's stop and go, just keep your distance at a constant low speed, instead of 0 - 20 - 0 - 15 - 0 like the impatient people in front of you. Hopefully, you can minimize the bucking, stop/starts, and get better mpg for you and everyone behind you. Of course, be reasonable about it and don't create a huge gap either. Some guy behind you will have an aneurysm if he doesn't reach his exit 15 seconds sooner.
3) Give it some time. It will get better/smoother as things wear in and your experience increases. It really is like learning to drive a new manual transmission car, except you don't have to learn the clutch.