Actually, the dude was a jerk, but the jerk was right. Dog pee is not good for other people's lawns, even in doses that the individual dog owner tends to consider negligible. The World's Smartest Human (tm) has spoken on this subject:
http://www.straightdope.com/classics/a2_072.html
Besides the damage to the vegetation, many people just have a high "eeeeeww" quotient about the notion of walking on grass that has at some point had dog pee on it. Admittedly, dog owners don't have complete control over where their pets take a whiz, but they should make a good-faith effort to discourage them from doing so on private property, or at least act apologetic if caught.
I don't buy it, Cecil's post notwithstanding. There are enough rabbits, stray cats, and especially squirrels (o god the squirrels) around here that Nutmeg's contribution is unlikely to matter, either in terms of nitrogen or "ewww". The claim is made, but not supported, that one dose will make noticeable marks, but this is demonstrably false. (Repeated use has made a mark just as described, but that's in the backyard.) Moreover, through instinct or telepathy, Nutmeg has learned to leave his mark only on the parkway side of the sidewalk, so even if it *were* a problem, it's at least restricted to city property.