awww, poor guy. Sounds like it might just take him longer to warm up to other dogs. Can you try a small dog obedience class to get him out and around other dogs in a controlled environment? Doggie Day care is a good idea, but it can be very overwhelming to a shy dog if there are a lot of other active dogs in the room. Perhaps check and see if anyplace offers smaller groups for shy dogs to interact with. I bet once he has a buddy or two to feel "safe" with he'll have no problem going into a larger group.
Wish you were in Dallas, I have a 4 lb'er and a 3 lb'er who would love to have another small dog to play with.
