It's almost tragic that Peter Jackson didn't go with this design for Gollum. However, it's completely understandable why the adorable Smaug didn't take off.
The thing that strikes me the most about this Gollum is that he also appears to be a cousin of the Vermicious Knids. See? (Soviet Gollum first, Knids second)
Here are some more of the Soviet Hobbit illustrations: