I have seen a "stuffed dog" not much bigger than that size, in one of those fantastic obscure museums that you get in small tourist towns which are full of random curiosities and badly stuffed animals - this one, I think, was somewhere in Somerset or North Devon, on a family holiday when I must have been about 15...
As i remember it was a pointer-type hunting dog (floppy ears, mostly white with brown blotches), looking pretty much exactly the same proportions as an adult dog of one of those breeds, but about the size of a hamster or half-grown rat - probably about 10cm high and 15cm long. The dog was in a bell-shaped glass case a bit like the one pictured near the entrance of the museum and had some info about the dog's life, saying it was born prematurely and never grew, but was healthy and lived to a normal doggy age until it was killed by a rat. I think it was supposedly owned by some aristocratic family, so it was probably pedigree and therefore in all likelihood suffering from the same sort of inbreeding as aristocratic human families themselves
I seem to recall it also said in the museum sign that this was the second smallest recorded dog, and there had been a Yorkshire terrier who was even smaller - probably the one in Graylien's post. This one seemed more remarkable though, because its parents were "normal" sized dogs...
It was very hard to tell if the specimen was real or fake - it certainly didn't look like an "obvious" taxidermic fake, and was better preserved than a lot of the very badly stuffed "normal" animals in that museum. I think I asked the woman at the ticket desk if it was real or fake, and she didn't know either...
There was also a thread recently on cryptozoology.com about a mummified cat of similar adult proportions but extreme miniaturisation. I will try to dig up a link to that thread...
