To be honest, I think the problem is on both sides.
The shelters we've dealt with all charged 200 and up for any dog, and required referance, background checks and a copy of our lease. We were turned away on adopting a kitten during kitten season because they copy wasn't enough, and they couldn't reach the landlord on a Sunday (uhhh hello it's Sunday, the man is off work?) As much as they say they want the animals to find a home, they sure seem to not want any to leave either.
I think we can all agree puppy mills are awful.
I don't know that breeders are much better though, yes the dogs are generally treated much better, and some do really care about thier dogs but, again, you are making animals that there are already too much of, and if you don't think your dogs will end up in a shelter, or have thier puppies end up there, you're not being realistic. You may tell someone they can bring the dog back for life, but really do you expect people to call you up, "lost the job and the house, come get the pooch" or do you think they just turn them in like any other pet.
Now on purse dogs... my neighbor has 8 of them (chihuhua & mixes), because once they're not puppies, they're "too big" to carry in her designer bags. So we now have a group of 7 hyper annoying freaked out rat-dogs running up and down the street. No offense to the people who do love these dogs, but this group is a prime example of why these dogs have thier reputation.
If I could I'd rather put the owner in the kennel but that's a different rant.