I hadn't heard of it until i started using this board. I assumed i didn't understand as I'm not a parent or maternal in any way. Seemed like a waste of cake :-D it just doesn't seem to make any sense, I don't understand the connection to first birthday and why that equals smashing cake. Googling it it seems to be a big thing, even here, but given that almost every couple/friend I know has kids - none of them have done it (and they range from pretentious to down to earth ;-) )
On a constructive level, wood seems more durable idea if letters is what you want to portray.