Before moving to my current property, I use to live in a tiny rowhome/townhome with a small backyard. The backyard was half cement and half dirt. I had a large dog and the dirt didn't work out (grass was not an option either). I mulched the entire dirt area with small pine mulch nuggets (shredded mulch would work, too), while my garden area ran about a foot deep against the entire length of the yard on both sides. I got to plant my flowers, and my dog got to use his space. It was easy to pick up after the dog, as I would just scoop out of the mulch. The urine would wash right down into the mulch, as would rain water...so no mud! I kept the mulch about 3 inches deep and would add about a new bag a month. If I picked up dog doo and some was left on the mulch, I would hose it down to "clean off" the mulch area. It looked nice, smelled nice, was maintenance-free, cheap, no mowing or grass to maintain, no tracked-in mud, and wet weather didn't matter because there was no mud issue.

What kind of sun exposure do you have? My dog adores pachysandra in any kind of weather--not to eat, but to lie in. Although you may blanche at the price if you go to buy some, it spreads fast, so you can plant it in patches and never need to buy anymore--if you want to move it, just pull it up, insert in new place with a bit of dirt over the root and water a bit--it will root quickly. I would put in pachysandra and wood chips, as suggested above. If you do go with crushed stone, it tends to get hot and is, therefore, not very accomodating to dogs (also stay away from white stone as any remaining mess will show). Pachysandra does well in part sun to full shade.

Dianne