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This is definitely a tricky question. In general, I am not a fan of the wholesale disappearance of entire industries, if nothing else than for the fact that even industries like the tobacco industry provide a lot of jobs in this country and help families of employees and people in the greater industry network (farmers, trucking, etc.) support a middle class lifestyle. On the other hand, tobacco products are troublesome to say the least due to their negative health effects and the social and financial costs (both apparent and hidden) that accompany them.
One aspect of the tobacco industry that must be kept in mind is that these cigarette companies are global corporations. They do business all over the world, not just North America. So even as smoking rates have decreased in the US over the past few decades, smoking has become more popular in other parts of the world, particularly in Asia and Africa, and the American brands are often considered the more socially desirable than local brands. So even as smoking has become less popular in North America, the business has simply shifted to elsewhere in the world, thus making it more of a global issue.
If we are to stick strictly to speaking about the US, I would argue against the wholesale removal of the tobacco industry. While the health benefits would be obvious, the sudden, permanent loss of a large source of employment coupled with the curtailing of personal freedoms as dictated by "big government" rather makes for an undesirable situation as well. Personally, I prefer the course of action that is currently happening anyway. Smoking is socially discouraged but still available, and is being slowly but surely taxed out of reach of the average American anyway.
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