To be honest, I think Skyrim has the weakest dialogue of all TES games, especially in terms of choices.

My character wanted to sell some weapons and armor to the smith in Falkreath, but alas, he wanted me to go on a quest to catch a dog. And the only dialogue options were:

"Sure, I'll do it"

or

"I can be convinced to do it. (persuade)"

What? There's not a "No" option? What kind of dialogue is this? I want to trade with the smith, but I can't unless I start this quest, and at the same time I don't want to start this quest because I'll have another mission clogging up my "journal", which is just a glorified objectives menu. (edit: not only does it take up space in my journal, but starting this quest puts a quest item in my inventory as well)

There are other examples of this ridiculous phenomenon too, like Lisbet in Markarth- the general store owner who offers a quest in which the only way to say no is to tab out of the dialogue. Fortunately in that case, once you exit the dialogue and speak to her again she'll actually let you trade with her. Sadly, the same can't be said about the Falkreath smith...

I'm really disappointed with some of the dialogue options in this game.

Agreed. While the world is stunning and overall I really like the game, Bethesda are unfortunately not known for their depth and choices. There are parts with some richness here and there, but I find myself using my imagination a LOT to fill in the holes. (That's fine, but it would be great to not have to all the time.)

They've been asked and asked dozens of times to add depth and choices, and to really make those choices affect the world, but they seem content on building amazing worlds and being mediocre with quests and writing. That's sad because they are SO close to making something EPIC, but seem to be happy with the status quo of mediocrity in terms of writing.

Didn't you know, being forced to take their poory designed poorly written quests with no choice is s a feature?

The option for "no" is already present. In just about nearly every conversation in the game, the player can immediately and at any time quit out of the conversation and walk away, and that is typically considered a "no." in some cases.

Try it sometime with a guard trying to arrest you, see how he interprets the action.

One thing to look at is the fact that when moders get really going they have no where but up...

No doubt no doubt, a lot of work though.

Yep... you can always tab out of an optionless conversation. You can also take the quest and ignore it.

Yes, the lemonade out of lemons approach.

If everyone thought this way, not a single mod would ever be made for this game. What would be the purpose? You can always just make do with whatever limitations (or bugs) are in the game. Shoot, console players have been doing this for years with Elder Scrolls titles.

I have found the Tab Key saves a lot of clutter in the Journal.

That works sometimes, but as I said I want to trade with this guy and if I quit the dialogue and talk to him again he just asks the same question. If I want to sell my stuff to him, I'm forced to accept the quest.

I think that there should be a "no." option. Why my -fictional- character (a polite guy) must walk away in the middle of a conversation just because the interlocutor was asking him to do something? He should be able to say "nah, I won't go to that dangerous cave to get your broom". And there is also the problem the OP has, that when he talks to de smith he only can say "yup, I'l do that thing you told me", not skip it nor decline it and get to the trade menu.