The final result was all the more cruel on the Hornets who had come back from a goal down with 10 men, and looked to have clinched a priceless victory.
Phil Jagielka put the hosts in front and Watford were left reeling when goalkeeper Lenny Pidgeley was shown a straight red card for handling outside his area.
But this only acted to increase Watford's resolve and goals from Smith and Heidar Helguson put the visitors into an unexpected lead.
With time running down an away win looked possible, before Smith handled in the area and Jack Lester squeezed the ball past substitute goalkeeper Alec Chamberlain.
The game began at a frantic pace and the Blades carved the visitors' defence open inside the first two minutes when Lester cut the ball back across the face of goal for Paul Peschisolido, but Wayne Brown made a vital interception.
The visitors' gameplan was clearly to hit United on the break and Scott Fitzgerald almost caught the home defence napping when he ran on to a clever through-ball, but the angle was tight and Alan Fettis made a comfortable save.
Warnock brought on Ashley Ward in place of Peschisolido as both sides came out for the second period, and the former Barnsley hitman could have broken the deadlock just minutes later. A cross from the right was misjudged by the Watford defence and the ball hit Ward on the hand with the goal at his mercy.
United continued to bombard the Watford goal and with 51 minutes on the clock their pressure told. Michael Tonge whipped in a corner from the right and Jagielka timed his run to perfection to direct a glancing header passed the diving fingertips of Pidgeley.
And Pidgeley's night was soon to get much worst when, after 58 minutes, the referee brandished a straight red card for handling outside his area in an attempt to prevent Michael Brown a clear run on goal.
Substitute goalkeeper Alec Chamberlain was brought on in place of Jamie Hand but rather than capitulate Watford began to enjoy their best spell of the match.
United's defence started to look shaky and five minutes later Ray Lewington's men drew level. Devlin chipped a delightful through-ball over the Blades' defence for Smith to run on to and he fired across the keeper and into the bottom corner.
The hosts looked to respond immediately and Chamberlain was forced to save with his feet from Tonge, but Watford's tails were clearly up and they took the lead with a swift counter-attack.
Neal Ardley crossed, following a poor headed clearance from Tonge, and Helguson rose highest to nod home beyond Fettis.
With a man extra United always looked dangerous going forward, and only an instinctive stop from Chamberlain prevented an equaliser after McCall cleverly picked out Lester with a quick free-kick.
The home side continued to push forward and with six minutes remaining they were handed a lifeline. Smith was penalised for handling a McCall cross in the area, and Lester was relieved to see his spot-kick hit the back of the net off the palms of the unfortunate Chamberlain.
Man of the Match: Ashley Ward