In California, any sign that implies your dog would hurt a person, makes you liable should your dog actually do so. Doesn't matter if the person is trespassing or breaking in or whatever--they can still sue you and win if your dog bites them. In legal terms, the fact is this: by putting up a "Beware of Dog" sign, you're admitting you have a vicious dog, and by allowing it to run in your yard, you're creating a risk to the public.
Now, if you post a sign saying something to the effect of "There's a benign dog in the yard", you have some protection because it says nothing about the dog hurting anyone. If someone is up to no good, they may see a sign with the word "Dog" on it, and decide to go to another house for their misdeeds. However, should the idiot come into your yard and get bitten, and try to sue you over it, you can argue you had no idea your dog would bite someone. That's why you didn't put up a sign that said "Beware of Dog" or anything like it.
In other areas, the law may differ. There are some places where you are required to post "Beware of Dog" signs so that the public is aware of the risk, and you could get sued if you DON'T post this type of sign. Best to check with a lawyer to find out what the laws are in your area, and the best type of wording to use on your sign.
You can have custom signs made at buildasign.com. You can design it however you want and you can even use your own photos. It's surprisingly affordable, too--I think mine was about $30 for a 18" x 24" aluminum, full color sign, and the second one was about half that. Mine says "Dogs in Yard - Do Not Enter" in both English and Spanish, with a picture of an alert-looking German Shepherd (no teeth showing or anything). I figure that pretty much covers everyone except blind people.