My next door neighbour's a fully accredited child minder. Her dog has caused her no problem. This is in a rural district, though, where probably 50% of households have dogs of their own, either pets or workers. Prissy urban families might be different.
But I think you need to know the dog, and trust it absolutely. A dog which shows even the merest hint of a temper is a no-go - children don't always know when to stop poking a dog. The dog must just put up with it or move away.
In any case, in our household the dog lives in an outdoor workshop. He can go outside in the garden whenever he wants, but he's only allowed indoors when invited. He's usually invited in whenever we're there, which is most of the time, but not necessarily when there are visitors. Depending on your house's setup, you might be able to do something similar - keep the dog and the kids separate until/unless everyone is happy for them to mix.
Dogs do smell, some worse than others (it usually gets worse as they get older for some reason). But then, so do children.
Guinea pigs do have the advantage that they don't live long. This gives children the chance to learn about dying, plus they don't get stuck with a pet they've grown bored of. They're also good roasted with a bit of pickle, but watch out for little bones.
