Yes, I agree that other methods should always be tried first. But for some children the other methods don't work.
I'm not sure about toddlers, but at a certain age (dependent on each child, but probably around 3 or 4 in my opinion) I do believe a child is capable of dintinguishing between a smack as a punishment, and between hitting other children, which is wrong. I know me and my sister certainly knew the difference, and as I've watched my cousins growing up I can see they can tell the difference too.
And many laws are contraversial. The fact something is law doesn't make it 'right' for everyone on a personal and moral level. Using that argument you could also say, if it was so clearly 'wrong' why hasn't everywhere already made it illegal?
I suspect the reason some places are trying to making smacking illegal is because it becomes difficult, in the eyes of the law to distinguish clearly between smacking as discipline, and abuse. It's not something I know much about, but my guess would be that it's so as to make it easier to convict those who really are abusing their children (as they couldn't then say 'it was just discipline').
Personally I don't believe there is a right way to discipline. Different techniques just work for different children.