My group has recently reached 6th-level. During our journeys, we befriended a riding dog (so, basically, just an ordinary dog, with natural 2 HD).
We gave the dog a Headband of Intellect, and waited for it to reach 4 HD so it could bump its Intelligence score to 3. It has taken levels in fighter, either 2 or 3 of them. At that point we took off the Headband, but gave it a head item that lets it communicate with people.
It also has barding and a +1 natural bite. We will probably buy it a dire collar at some point.
Given its poor ability scores, compared to those of the PCs, and the general unwillingness to buy it expensive items, we don't really expect the dog to replace a PC. Instead, I'm looking to give the dog a cost-efficient way of doing things for itself. I want it to be able to remove its armor by itself, open doors by itself, handle coinage, and in short not be limited by the lack of hands. At some point, the dog will retire, and we want to make sure it's okay. (I figure the final gift will be a +6 Headband of Intelligence, because Int 3 is... not enough.)
I looked at the Hand of the Mage. That replicates Mage Hand, which is only 5 pounds, and requires the user to point at the target... and the dog doesn't have fingers to point with. A Ring of Telekinesis probably gives the dog what it needs, but that's 75,000 gp, and has powerful combat abilities the dog doesn't actually need.
Maybe a better item is the Hat of Greater Disguise. If the dog can speak when he has a human voice, then he won't need the circlet that lets him speak Common. Unfortunately that would require the dog to be constantly transforming. It's the best option I've seen so far though. Does anyone have any better ideas?
For 2,050 gp and a pint of the dog's blood you could have a homunculus made for it. It wouldn't be a familiar, naturally, but homunculi work just fine by themselves if you keep them out of combat. They're humanoid-shaped regardless of the blood used to make them AFAICT, so it'll have hands. With Int 10 & Wis 12 it can even help the dog solve problems. (It can't speak, but is linked to the dog telepathically.)