The use of rebar for rungs is poor.  Welding of rebar is probamatic at best.  One should  be concerned with the cracking of welds on rebar issue.

www.osha.gov/Publications/osha3124.pdf
In addition look at 29 CFR 1910.21 through 1910.30 found here http://www.osha.gov/pls/oshaweb/owastand.display_standard_group?p_toc_level=1&p_part_number=1910

and 29CFR1926.1050 subsection X and its' appendix found here http://www.osha.gov/pls/oshaweb/owastand.display_standard_group?p_toc_level=1&p_part_number=1926

so what is a good choice of material?

Is it true that OSHA does not allow smooth bar on ladders any more? If so, where can I find this info on OSHA website?

There are lots of bar stock, hot or cold rolled, that is available.  pay attention to carbon equivalent of the steel and follow AWS D1.1 recomendations for preheat, interpass temperature, joint design and inpection.

Use of smooth bars, I know of no regulation prohibiting this.

1910.27(b)(1)(iv)
Rungs, cleats, and steps shall be free of splinters, sharp edges, burrs, or projections which may be a hazard.

As I understand it, the current OSHA rules "for construction" require slip-resistant rungs.  The current OSHA rules "for general industry" do NOT require slip-resistant rungs.  The Proposed rules "for general industry" do require slip-resistant rungs, but are not yet in effect.  You can hunt the CFR's up online and read them for yourself.

You'd have to check with the particular rebar as to weldability.  I believe some of it is a low-alloy formulation intended for bending, and more weldable.

One drawback is that rebar is not necesarily "slip resistant".  At least it's not intended for that application.

You can buy non-skid ladder rungs from McNichols, maybe Klemp.  I think there are two or three styles available.  Unfortunately, any ladder rung that is truly skid-resistant is inherently difficult to keep painted, so they are not ideal solutions.  You can also buy skid-resistant tape products, and skid-resistant paint products (basically sand thrown on wet paint).

Ok. Thanks for all that info. One more rookie question: When you specify a smooth rung, is it by default SA36? Does SA36 have any weldability problem?

Normally, a "smooth rung" would be A36, just because that's the most commonly available material.  And easily weldable.  It is a hot-rolled product; you could probably find various formulations of cold-rolled materials out there, too.