I think you are missing out RR. I've got friends who also do not let their dogs live in the house. I don't let mine on the furniture but having them indoors at night is nice. They are love machines. If you or the kids have a bad day you can count on those little buggers to sit at your feet for pets and general goodness.
My last dog also saved me from a middle of the night break in at my house. I was already sold on the live inside thing but after that in was in cement. That old dog got a free pass after that incident.
This current puppy however is making me rethink the whole thing. He's a good dog and all but I swear he has horns.