Sorry to hear of the problem you are having.
The WP Smush.it plugin only provides interface in the WordPress to the smush.it service provided by Yahoo. It optimizes images by calling Smush.it APIs so the functionality of it depends on the features provided by Yahoo Smush.It service. you will find more information about it on the following page.
We have last updated the WP Smush.it plugin on 2014-6-12 which you can see on the following page so i don't think this is the issue of the plugin.
I think this temporary issue may be caused by the Yahoo smush.it service.
Are you still facing the issue?
Then let's troubleshoot it from our end.
Can you please try enabling WP_DEBUG mode? To do this, just go to wp-config.php include this:
You might already have a line for WP_DEBUG, so just make sure it's set to true.
Let me know what errors if any you are getting!
Also enable WP Smush.it debug processing from the following path and let me know what debug information you are getting when you try to smush images.
Admin Area -> Settings -> Media -> Enable debug processing