Hi - I went through this process just 21 months ago and have a few suggestions. Hopefully my experience will help! Our situation was slightly different from yours in that we have lots of space. I researched breeds carefully, read books and spoke with breeders and my vet (I had a cat previously. I ended up making my decision not purely based on what I was advised and learned, but also because I had this breed when I was young - I went with a German Shepherd. I am NOT recommeding this for you... they are absolutely great dogs, but not a city/small area dog of course, and soooo much work to keep exercised and keep my home hair-free(well, no such thing as that anymore, but at least keep the hair in control)!!! In hindsight, it was not the best choice, I added more complexity to my life than I needed! Was I recapturing my youth?!?! He He He
Since getting Niko (we got him at 8 wks - now he's almost 2 yrs), I have had the opportunity to also meet many other breeds (I take him to regular obedience and agility classes so I have lots of dog trainer/handler interactions.) I would strongly urge you to select a smaller breed (under 50 lbs)and not to select a LAB or GOLDEN as I see recommended below. They are lovely family dogs, but have high exercise needs (otherwise health and behavioral issues can arise), need more space, they shed profusely, can be high strung/excitable and thus difficult to deal with - they will stretch your patience to no end when young. One thing to keep in mind is that generally speaking working dogs (retrievers, shepherds) have higher prey drive and can be chewers or diggers, or just high strung if not getting enough exercise and given a clear purpose/job. So, I would recommend the following:
From the smaller (15 to 40 lbs) breeds:
WHIPPET (great city and family dog - loving and quiet, but also very playful)
BORDER TERRIER ("Benji"; great with kids and in city)
AMERICAN WATER SPANIEL (mellow and great with kids; low maintenance; looks more like a mid-size breed; not so dainty)
LAKELAND TERRIER (great with kids/generally not a biting breed; low maintenance coat; cute cute cute breed)
MANCHESTER TERRIER (great with kids, great in city, minimal exercise needs; on the smallish side)
Or for a bit larger than above:
CHESAPEAKE BAY RETRIEVER (up to 60 lbs; great with kids, quiet breed; pretty breed)
Or if you go a bit smaller (up to 25 lbs): PUG or CORGI (both act like big dogs in little bodies; good with kids, low maintenance although they both shed a lot).
There are so many lovely breed and dogs of different dispositions within each breed of course, but I learned my lesson after getting my big GSD and trying to recapture my youth! ;) While I love my pup, he's a TON OF WORK and SHEDS LIKE A FIEND...just more than I bargained for esp with a toddler as well. So, 13 years from now I'm going with a much smaller breed (or even a cat!);) LOL
This is a fun little selection guide to try also: http://www.selectsmart.com/dog/
By the way - I completely agree with the moms that said they prefer purebreds with the caveat that you really do your due diligence and check out the breeder- it's best if you can find someone local so that you can go out and meet them, see the kennel (how clean, well-kept is it?) and meet the mom dog (usually that's the one on site, dad may or may not be). Definitely review any of the dog's pedigree paperwork and discuss temperament. Also, you want a breeder who wants to know about you and your family and shows concern for where the dog is going. You want a breeder who is going to conduct a temperament test when they are roughly 7 weeks old and then tell you which puppy(ies) are suitable to your family, and NOT one that allows you to select your puppy yourself after they are born (RED FLAG). They are being careful about placement to make sure you get the right temperament and the pup gets a good home - that's a good breeder.