I was just wondering about the same. The benefits for Smart Cards (preferably USB-dongles), is that it is actually a x509 or PKCS#12 certificate on them. This means that one can use encryption as security. Usecases for Smart Cards:

1. SSH
2. OpenVPN or StrongSwan
3. Encryption of harddrive
4. SSL client certificate for web-browsing

The dongles also lock them selfes up if I type the wrong pin too many times.

I am using ePass2003 and cryptoStick. They work ok, but they are a bit slow.

When I run: time ssh localhost true

It takes 1 second with with ePass2003 or cryptoStick. But with a key on disk (and ssh-agent), it takes I wonder if anyone know of a faster USB-token.