That sounds like the smell of burning clutch. But (in a car that doesn't have a ton of power, relatively speaking) it's hard to burn the clutch if you drive the car easy and don't shift at high rpms.
Defective, maybe...perhaps it's slipping quite a bit and not engaging all the way, which would result in burning when you revved the engine to accelerate as you normally would after clutch engagement.
Edit: are you the first driver? Or was the car bought used? To find out if the clutch is slipping (or not engaging for whatever reason), start the car, put it in fourth gear, and begin to release the clutch. If the car stalls, you're fine. If it sputters or doesn't stall for some time (or at all), you have a clutch problem.