The smooth mesh preview is a temporary state, you can toggle between 1 and 3. Regardless of whether you have 1 or 3, if you mesh > smooth, you will get a smoothed mesh. If you have smooth mesh preview also on, then you will have a smoothed version of your smoothed mesh, so it will look smoother. The word smooth has now lost all meaning.
I think most people UV before smoothing, but not 100% sure on that.