I designed ST to build jGuru after getting sick of the “code in template” model of JSP. Velocity and friends (i.e., every other engine i think) give you more power than you need. I used basically four features to build jGuru.com (as described in paper). More features are unnecessary and lead you to entangle your model into the template. If you’re building a one-off prototype, that’s ok and any engine is fine. Code in templates is ok in that case since you don’t care about maintenance.
Another thing people seem to ignore: how the hell can a graphics designer read code in templates? They can’t. So, how can they work on the templates then? Even changing the order of some elements can break your model. You really need the separation to work in commercial environment, unless you want a site that looks like a coder built the html 😉