It obviously makes the character more "bad ass" with a cigar I'd presume, sometimes it just goes with the character, without necessarily having to subtly advertise smoking to gamers... now that I think of it I couldn't imagine Mass Effect 2's Illusive Man being the Illusive Man without his damn cigarette and his glass of alcohol, and I never thought "oh my God, is BioWare promoting smoking and drinking alcohol to gamers with that guy?!", I am profoundly against smoking in real life, and I really don't care about SCII's approach with it, in fact I pretty much not care about digital/virtual smoking and drinking, probably as long as it's done without promoting real-world brands/companies.
Also, ultimately, video gaming is portraying a lot of humanity's various sins, it doesn't mean the developers purposefully want to promote/advertise them. If you really want to analyze things that much you could as well pretend that video gaming in general has been promoting violence with games like DOOM, Quake, Mortal Kombat, GTA series, Just Cause, or various games with exaggerated amounts of blood, gore, dismemberment... and I'm pretty sure that the developers of such games over the past decades up to this day didn't really woke up a day and thought "hey guys, let's make violent games to promote violence to gamers, thus creating a better violent society over the next generations due to indirect influence!". I think that the same principle applies to smoking and drinking alcohol.