They're cute, cuddly, sweet and adorable. And yes maybe a little smelly. Okay a lot smelly. They just sometimes plain stink. It's not their fault or yours, but if you're trying to effectively market and sell your home the sweet stench of dog (or any pet for that matter) can be a huge turn off for potential buyers. Believe me, I've had clients literally say, "We like the house but it just smells too bad, let's just get out of here."
You may love your pooch, but your house will hopefully only be on the market for a short amount of time and really the best thing is to not have pets in the home you are trying to sell. Maybe they can go stay with grandma or at a friends (not unlike the kids lol) but you've got to get ahead of the odor issue before it becomes too big of an issue. In homes with carpet this can be a hard thing to deal with - but do your best to remove all traces, there may be a dog lover or two out there that says "Oh, I just love this wet dog smell!" but trust me when I tell you they are not the majority!
Now, go give Fido a whiff and see what you think - and good luck with listing!