Smith will surely take part in the auction, virtually zero chance of him going unsold. He's not T-20 great but he brings experience, solidity for his team. On the other hand Joe Root failed to grabs eyes in IPL so far, for right reasons. Even English team avoid selecting him in T-20 squad so it doesn't matter if he's opting out or not, he's not going to find any buyer anyway.
You can disagree with me, but as far as I am concerned, Smith is one of the best captains out there. During the last tournament, although he didn't scored too many runs, Smith did a pretty decent job in captaining the Rajasthan Royals side. During the initial phases, Smith and Warner were the only non-Indians captaining IPL franchises (before Pollard was appointed as the Mumbai Indians captain during the later phases).