The SmartPhone invasion is a major trend. It is estimated that 2014 will be the year that SmartPhones overtake computers as the principle means to browse the Web. On average those screens are getting larger. The Apple iPhone, the most popular SmartPhone around, just moved its screen up from 3.5 inches to 4 inches. Samsung released the Galaxy S III phone with a 4.8 inch screen and the new Note 2 "phablet", i.e. phone-tablet (screen so large it borders on tablet size) with a 5.5 inch screen. BUT, those screens are tiny compared to a 15 inch laptop computer even if the trend is for bigger screens they are still small.
What this means for your business is keeping small screens in mind as you create a website. You can, and you should, design your site to detect what type of device a user has and deliver a version best for them. Any time you type in the "dub dub dub" of a website your computer device (phone or computer) is actually making an information request to a server that hosts your website. In making that request your device passes along some information like where it exists on the Internet, operating system information and which browser is making the request. Programmers can use that information to deliver different results for different users.
In general, what you end up creating is two different websites BUT if you work with your programmers ahead of time it only takes about ten to twenty percent more effort to offer a nice alternative for those small screens. Mobile sites tend to "stack" all the information on top of each other. So a site that is two columns, say text on the left and photos on the right will have text followed under it by a photo and more text, more photos, etc. That makes the page both more readible and easy to navigate. Also, many times graphics are either eliminated or swapped out for low-resolution graphics.
The assumption is lots of those SmartPhones are on cellular data networks which are much slower than the general Internet. People are a bit more patient when downloading off cellular networks but everyone has limits to their patience. Ten seconds is about the limit for attention span. You don't want to lose visitors for slow sites so shrinking graphics is a good way to go. You also need to drop complex code and technologies like Adobe flash. Many sites create mobile apps so there is zero download time for the graphics. The app itself contains all the navigation and visual structure. The users are just hitting the servers for data only so the experience is much, much faster. However, people tend to get "app'ed" out and you need to build a different app for each mobile operating system (droid and iOS). On the go, people just want information. You will need the mobile website anyways. So unless you have a very particular reason for an app - go with a good mobile website.
A more plain looking mobile site is perfectly acceptable to users. This expectation will change over time as cellular data gets faster and SmartPhone screens start to enlarge. For now, the top one and two reasons people are using their phones for your site is to get your phone number and find your location. You want to make sure your mobile version has those two pieces of information right up front.
Embrace the future and plan your website for small screens. It will only help your business.