Is it permissible to give money to an indigent relative who smokes cigarettes, or is it better to give him in-kind goods?

Smoking is forbidden, and it is not permissible to assist in it. If you know that your relatives will buy cigarettes with the money you give them from zakat, then it is not permissible to give them the money. You can buy food or clothes for them with this money, because it is permissible, for the sake of benefit, to give in-kind items as zakat instead of cash.