Hi Joshua,
There's not a perfect cutoff mark as far as URL length. In general, I try to clearly identify the keyword targeted as the page URL, and stick to one subfolder, or occassionally 2 subfolders on a larger site. Beyond that, I try to avoid being redundant, which is the biggest issue with the example you presented - you should try not to duplicate long strings inside the URL - in this case using "german-shepherd-puppies" twice is what makes it too long and redundant.
Assuming you want to target the keyword "Long Haired German Shepherd Puppies", I would rather see a URL like one of these:
- http://www.farnorthkennel.com/puppies/long-haired-german-shepherd/
- http://www.farnorthkennel.com/long-haired-german-shepherd-puppies/
Then for the actual page for Lava or one of the other dogs you'd probably do one of these:
- http://www.farnorthkennel.com/puppies/long-haired-german-shepherd/lava/
- http://www.farnorthkennel.com/long-haired-german-shepherd-puppies/lava/
That is an effective URL that isn't too keyword stuffed and isn't redundant.
Taking a further look at the site, you could also consider options like these: