It would be immensely better if they did not, in fact, have an army. Most times it is not necessary, or at least not necessary to have a standing army. They are expensive, socially destructive often times, usually counteractive to democratic institutions, and their mere existence can many times lead to wars.
Costa Rica is a good example of a country with no army, just a small police force, and not only have they been fine and secure, they have also been able to avoid some of the war, poverty, death and destruction caused in other Latin American nations who do have a military.
I've never really given this much thought, but I suppose I do think every country should have the right to raise an army, anyway. As my colleague points out, there are many places where doing so would be an exercise in wastefulness, as their odds of being attacked by outside forces is slim to none. I do, however, advocate the idea of a national guard type army in every country, one which can be activated in case of natural disasters, terrorist attacks, or other such national emergencies. Without such a contingency, a country could find itself in dire straits at some point. Thanks for allowing me the opportunity to consider this question.
I do not think that every country should have an army, in fact, I think that many countries do not need them. I think that most "small" countries (however you define that) do not need them.
The reason I think this is that I do not believe that the international community will allow small countries to invade each other these days. If, for example, Myanmar were to invade Laos, the international community would surely stop them and would not allow them to take Laos's territory. If that is the case, what is the point in either country having an army?