I blogged about this case previously (here and here). As this article notes, Ms. Smith's daughter Dannielynn has been named her sole heir.
The interesting issue raised here is this: if you specifically disinherit someone (as Ms. Smith did -- her Will excludes descendants born after its execution), but your Will winds up not listing any valid beneficiaries (thereby creating an intestacy, with your heirs inheriting your property), can the person you disinherited take as an heir? One approach might be to consider Ms. Smith's heirs, but exclude as heirs anyone specifically disinherited in the Will. I believe that would leave Ms. Smith's mother as her sole heir. Of course, there is an inherent unfairness involved here -- should an individual be able to disinherit their minor child?