One of our own readers might have some insider info on the future status of Hunter Smith. As slider09 suggests, the Colts may cut Hunter in order to save cap space. Hunter costs $941,428 against Indy's cap in 2009, the last year of his current contract. I'm not sure if his 2009 money is guaranteed, but nearly $1 million for a punter is a lot.
Recently, the Colts signed P Mike Dragosavich. He spent some time with the Patriots and Browns last year.
Cutting Hunter would not be a move based on performance or anything like that. Indy has always brought in punters, looking for a cheaper alternative to Hunter. And every year, Hunter has beaten them out. He really improved his ability to punt with his coverage (instead of too far ahead of it) in 2008. Also, his FG holds for Adam Vinatieri are excellent, even when the snap is crap.
However, this year, the Colts may go with a cheaper, and possibly less effective, alternative to Smith. Remember, the crappy economy affects the Colts as well. Like several other teams, they may need to make moves just to save money as well as cap space.