The breath is such an important part of meditation. Will a decreased lung capacity decrease the depth I can achieve in meditation?
This is a form of intoxicating addictive substance. Any such substance will hinder your meditation and quality of life. Things like unhealthy food (some foods induce the 5 hindrances) and drinks also have a similar effect.
Also when meditating you should be both mentally and physically fit. The addiction will reduce your metal fitness and the health effects will reduce your physical fitness. So your lung capacity also will play a role.
This does not mean which you should not attempt meditation as a smoker. Perhaps you should take a residential course where you do not get the chance to smoke / drink, as to get results you need to have mental and physical well being. Then you can leverage on the meditation to slowly get you out of addiction.
Check out the Fifth Mindfulness training listed here: The Five Mindfulness Trainings (Page 19). These are the precepts written by Thich Nhat Hanh. I am not going to summarize his commentary, but hopefully his writing can help shed light on what you are looking at. May you be happy.