If it is true that Michael Phelps was smoking dope at a party, then he is a very silly boy. The four year ban for drug taking means that he would not be able to compete in the 2012 Olympic Games in London.
On the other hand, I have looked pretty closely at that picture, and cannot see any signs of smoke. Add to this that he has had over 1500 drug tests and never failed one, and maybe there is room for some doubt here. A urine test should be able to confim either way. If it was me, and I was innocent, I would be rushing to the nearest testing centre.
But even if he was just mucking around with an empty bong, it is still a dumb thing to do.