Cats and dogs, like humans, can suffer ill-effects from being exposed to second-hand smoke. Studies conducted on both dogs and cats both show a higher incidence of cancers than in non-smoker homes.
Toxins released into the home environment are liable to settle in areas that pets are most exposed to. Furniture and flooring are locations that your dog or cat typically spend their time. Unlike humans, who often leave these environments for extended periods, pets are home without much respite from these toxins.
Cats are especially susceptible to smoke as they are enthusiastic groomers and lick the smoke residue from their own fur. It is therefore not surprising that mouth cancers in particular have a higher incidence in cats that cohabitate with smokers. Tufts University published a study linking lymphoma to second-hand smoke (learn more here). Dogs (especially those with longer muzzles) are more inclined to contract nasal cancers according to studies (learn more here). Sadly both nasal and oral cancers often have a poor prognosis.