.m3u to smart play lists...

M3U's are not smart at all-- they are just text lists of files. There is no logic to convert...

Assuming your current M3U is based on some sort of logic (now done manually, by you, of course), you need to enter your logic into the smart playlist manually. iTunes will take over from there.

BTW, I wouldn't describe smart playlists as having advantages over manual playlists because they aren't at all regular playlists with extra features-- they're totally different in both construction and purpose.

By saying that, I mean that you can't add songs manually to a smart playlist-- this happens automatically if and only if songs meet the criteria specified in the logic.