According to my very smart DH, cats have very similar facial muscles to a human. That is why you can get definite expressions on a cat's face. He also says that cats can also be left or right handed!!
If you have lived with a cat for any length of time you can tell by the face and the eyes whether we are a HAPPY cat or not.
Look at Chichi on this picture. Doesn't she look like she's smiling?
Yes, I believe cats do smile. When I see my cat sitting around looking bored, mindlessly staring at the wall, I come by and kiss her on the forehead and pet her a bit, she looks really happy and gives me something that looks very much like a smile.
Gizmo definitely looks a bit 'smilier' when she is happy. Her prominent whisker pads normally give her a pouty, somewhat disapproving look when she's seen from the front. Perhaps she is simply moving her whiskers back to show the 'smile'. Anyway, it is the sentiment that counts.