Here is an example of unsmooth skin. It doesn' look as nice as other pictures I've seen. Any suggestions?

I can't see the image since it's a .BMP, but I can guess that you don't have "Anti-Alias" checked in for your render settings? -JH.

It displays in my browser of choice, iCab. Yup, definitely not anti-aliased, but unless you've got all your shadows turned off, it's also not rendered. If you want to anti-alias an unrendered image (great for wire frames and sketches), just choose Anti-Alias from the Render menu.