Well as the only information I have to go on is your neighbor's age and the fact they love dogs this is not an easy question to answer. Based on what you have told me I would suggest a good book about dogs or a subscription to a dog lovers magazine.
If you are looking for a less expensive gift you may consider a key ring with an ornamental dog on it or coasters with pictures of various different dogs on them.
If you know of any dog shows in your area in the near future you could perhaps buy them tickets to the dog show.
Tickets for any good movies with dogs or a dog as the star of the movie will probably also be welcomed.
If they have dogs you may want to give them a gift certificate from your local dog parlor so that they can have them groomed.
Hope these suggestions were helpful