I'll go against the grain here and say that the dog was one of my favorite parts about the game. Yeah he was buggy, yeah he was just about as useful in combat as a gimp granny with her pink flowered handbag, but I loved him all the same.
I could elaborate on why I liked the dog but it would be pointless as I agree with the idea here. Fable is about choice, not following a set path.
Having the preconceived notion that all players would instantly and permanently fall in love with the dog led Lionhead to make, what I guess would be to the dog haters, their fatal mistake.
They made the dog integral to certain aspects of the game. Without the dog the chances of finding buried treasure are slim to none. And without the dog how else would you pick up chicks, with the "Oh he's so cute!" and all that.
Okay that last bit was a total falsehood.
What I'm trying to say is that the base game should cater to everyone. Who knows, maybe it should be that if you choose to give your dog to the pound you won't be able to find buried treasures or complete certain quests, but the option should be there.
Let the player make that choice. That is what Fable is all about after all, choice.
We can't cure the world of sorrows, but we can choose to live our lives in happiness.