Wetherspoons have taken the bold step of banning smoking in some of their pubs and their wet sales certainly took a big hit as a result (though food sales increased). However, it's currently easy for smokers to find an alternative bolt-hole so you can't draw conclusions from this experience as to what will be the effect of a total ban.
CAMRA's national newspaper, What's Brewing, recently carried a detailed report from New York, where smoking in public places was banned in March 2003. The consensus seems to be that business did slacken off at first but that trade soon recovered and is now on the upturn. Smokers have become used to going outside for a drag, even in the New York winter; the ban has created a new "smokers' culture" on the streets which smokers actually enjoy. Many bars have installed outdoor heaters and other facilities, which British pubs will no doubt do as well.
The health benefits of the ban seem to be unarguable; for instance, levels of cotine, a by-product of nicotine, among non-smoking bar workers have reduced in New York by 85%.
Similar experiences have been reported from Ireland where the predicted mass closure of bars just hasn't happened.
The long-term impact of the ban on trade is then likely to be neutral at worst and could well be positive - though there is likely to be short-term pain as hardened smokers adjust to the new regime. One New York bar owner's advice to his colleagues across the pond is "You gotta roll with the punches and make the best of it. Hold on to your britches and full steam ahead!"