I think it should be entirely your choice. It's got nothing to do with your friend.
Personally, I wouldn't mind a dog on the bed (but not in the bed - as I have seen in some YouTube clips).
I do think owners have to be a little careful of over-cossetting their dogs though because I think it can make the dog possessive and sometimes over-protective of their owner. I think I read somewhere, or heard on TV, that owners of small dogs can sometimes get in the habit of picking them up a lot. The dog interprets this as they are guarding their owner and can develop over-protective behaviour - growling, snapping, etc.