To P or not to P

And by "P", I mean PUPPY.
Several months ago we started chores for allowance around this house.
Two motivators were behind this decision:
1) We want to teach our children financial responsibility (I know, kind of ironic in light of this post!)  ;)
2) The kids (and me) are wanting a dog.  But dogs are a lot of responsibility and work, and we wanted to make sure the kids would be of consistent help.  (Yep, pooper-scooper will be added to the kid's chore chart!)
So we are discussing the whole puppy issue now.
Why now? 
Well, since we are not moving for awhile, seems as good a time as any.  And in a couple years, our carpet and kitchen linoleum will need replaced.  Would rather house-break a puppy on old carpet. :)
Currently, there are no long trips planned for several months. 
And, we are coming up on warmer weather (for frequent puppy potty breaks outside)

Cons:   Money (purchase, food, vet....)
            Messes - especially the stinky, brown variety on carpet.
            Misbehavior (had to think of another "M" word) - time to properly train the puppy.  I do NOT want
                                    a barker, "humper", or jumper!
Pros:    CUTE and CUDDLY
            Children responsibility training
            Crime prevention  - protection both when Dan is gone and walking with kids
            Children and Dogs just belong together.
            Calorie Burner - good motivator for kids and me to exercise  (need to walk dog...)

Breeds???    Pure-bred or Mut???

We want a medium-sized dog.  Big enough to offer some protection, but not so huge as to not fit in our house.... or eat us out of house and home!    I like the idea of a poodle not shedding, but not fond of pure-bred poodles.   We do not want a "yipper".   Obviously, we want a breed or mix-breed that is great with children.  Intelligent always nice (for ease of training).  I'm thinking I want the dog indoors.  (I know, Mom is happy...)  But I know if we do "outdoor" dog - we will ignore it more, which wouldn't be fair to the dog.  If we are going to get a dog, it's going to be part of the family.  Might be different if we lived on an acerage or farm with plenty for her to do, but we don't. (Yes, I said her.  I figure a female dog will be less inclined to hump everybody's leg that visits.  Am I wrong???)

So I guess what I am saying on this post is.... HELP!  I need your prayers and ideas!  This is a very major decision and we want to make a wise choice. 
Thanks for your prayers and input!