As the Smith machine constrains the body to a single plane of motion, it does not develope the stabilization skills, or ability to force the bar into proper form, so lifting ability on it does not translate into freeweight lifting ability, whereas one can always lift on a Smith machine whatever one can freeweight. Weight that requires stabilization, generally freeweights, are thought to be more 'functional', in that they better mimic most physical tasks that the body would normally be asked to accomplish.
Due to the necessity of perfect placement under the bar for proper vertical arc, it is difficult to attain perfect form on the machine, which can result in the force loss, and also result in unusual strains on the body. For those who don't believe some exercises have a perfect vertical lifting line, but rather a slight arc (such as certain bench pressing methods), it is by design impossible to do it this way on the Smith machine.
For these reasons a regular barbell with a power cage may be used for the desired safety.