How exactly would this help? The only way toys can give happy thoughts is if a dwarf buys one ("He made a satisfying acquisition lately."), and that doesn't happen unless the Economy is active (which doesn't happen anymore in version 0.31.xx).
Incidentally, can anything else cause this thought? I had a dwarf with this thought recently and I was under the same impression that it wasn't possible in the current version.
Well I had a dwarven baby that was miserable after a parent died and after making some toys he was happy. I know the economy isn't working, but I fiigured that helped. So the smooth stones doesn't work in workshops huh? It seems to work in the dining hall as reports say the dining hall is magnificient or something to that effect. I know about assigning dwarves rooms but it takes time to excavate and that's in process, which is why I smoothed the dorm while I'm creating rooms and assigning the angriest dwarves (and nobles) rooms first.
Smoothing and engraving the dining hall would definitely increase its value, since you're designating it as a room from one of the tables. Workshops are different in that you don't designate a room for them and thus the smooth walls don't get factored into the value of any room. Now, I'm fairly sure that engraving such a wall will still give a happy thought if a dwarf happens to wander by, it's just less likely to happen than in say the dining hall.
I'll also second that decent personal quarters and a nice dining hall are pretty much all you need to keep the dwarves happy. Each of my dwarves has a 2x3 smoothed bedroom with a bed, chest and cabinet. I believe the tutorial I followed to get into this habit was written while the economy was still active and such containers actually made a difference, but it seems to keep them happy. Constructing 3 pieces of furniture, a door and digging out a room for each migrant doesn't take all that much time really.
The dining hall is filled with enough tables and chairs that I don't see any bad thoughts about crowding or lack of chairs, and I smooth the entire room. I engrave all of the walls except one, which I reserve for future expansion of the dining hall (mining through a master work engraving will tick off whoever engraved it). When I get a chance, I throw in some statues to increase the value of the room some more.
Interestingly, my dwarves don't seem to make many friends, even though many of them do hang out in the dining hall. I suspect the large size of the dining hall keeps them from socializing too much. Thus even though 99% of my dwarves stay at ecstatic, even if a few started tantruming it would likely be contained with little effort.