Note that that code will replace every occurence of 🙂.
so if you put:
"Seperate the words using a colin (🙂"
it will also put a smiley.
You can prevent this by requiring a space before and after the smily:
$message = str_replace(' 🙂 ', '<IMG SRC="smile.gif">', $message);
A forum, a FAQ, email notification, what else do you need?