Hello! I'd like to add my own experience with Shelties and comment on what other people have said about them. First off, I have 2 beautiful Sheltie boys right now, ages 12 and 2. I have had Shelties all my life, and never desire to own anything else. First off, to answer your questions. Shelties make excellent family dogs. They are intelligent, patient, loyal, and loving to their family. They can be reserved around strangers and may not greet everyone with a wagging tail, but Shelties love their family like no other. And they are a good size dog for children. They are small enough to be walked and played with by a child, but they are not fragile in the least.
I'm not sure why a breeder would require that owners be "experienced" with this breed. Many many first-time dog owners have Shelties. There is nothing about their personality that is difficult to manage. That's not to say they're perfect, but a novice dog owner can successfully own a Sheltie. I would disagree with MoonMaiden that Shelties can be independent. In fact, I could hardly think of another word that describes Shelties least. They are so people/family oriented, they they would rather be with their owners than anything else. I don't know how many Sheltie people I have talked to who all experience the same thing: never going to the bathroom alone. My dogs follow me EVERYWHERE, including the bathroom. If I go to the other side of my bedroom, they follow me over there. So, from my experience, Shelties are absolutely not independent.
In general, Shelties are a healthy breed. There are breed specific problems that need to be tested for, but if testing is done, there are few breed specific problems that arise. Eye problems can show up, but again, testing can significantly reduce the probability of that showing up. MM said that Shelties can have HD, but any dog of any breed can get this. All breeding stock should be hip scored, but Shelties are not a breed known for HD.
Probably the most serious problems in Shelties is vWd, von Willebrand's disease. It is very rare, but is very serious. It is a blood clotting disorder, like hemophilia. A dog can be a carrier for this and still be bred without passing it on. It is so important though, that the parents are cleared of this. Again, I have never heard of a dog with this disorder, but it is something that all breeding stock need to be cleared of.
Jas said that Shelties can have a very strong herding instinct, which is true, but it is not usually a problem. I have never had a Sheltie who excessively herds anything-each other, toys, children, etc. One trait that is very typical of all the Shelties i have had is that they are very adaptable to your lifestyle. They would play all day if you wanted to do that, but they are also just as happy lying at your feet for hours. Both of my boys are sleeping at my feet right now, but if I were to throw a ball outside, they would chase each other for about 10 minutes, then be done! They can be used as a running partner, or they can function as a couch potato.
While I find Shelties to be perfect for me, they do have a couple of drawbacks. Like Jas mentioned, the primary concerns are grooming and barking. They do need grooming, but it is easy to maintain. Two 15 minute brushings per week is usually sufficient. They don't require shaving or clipping or anything a groomer needs to do. They could use occasional trimming of the feet and ears, but in general their hair is easy to care for. Because they are herding dogs, they do have a tendency to bark. My boys are very different in that aspect, though, as my younger boy is reactive to knocks and people outside, but my older boy has never alarmed or been alarmed at any noises or people. There is so much variability within any breed that some Shelties never bark, and others bark constantly. This can be a problem if the dog is left outside. My dogs go outside to go potty and come back in, so barking is not an issue for me. Because of this, however, make great watchdogs. I know that if anyone ever tried to break into my house, my younger dog would sound his alarm as soon as he heard anything strange, which is very comforting when I live myself.
To end on a good note, Shelties are the most amazing little dogs I have ever met. They are so intelligent and would do anything to please their owners. Let me know what you decide to do. I put a new picture of my boys online, so if you want to see their new picture, you can click on the link below. I hope this all helps you decide if Shelties are right for your family!
http://www.angelfire.com/wa3/ravens016/newboys.html