Bailey is such a little doll! I love the pic of her in your pink hat.
Pee pads are sooooo convenient. I don't think that I'll ever switch Missy to going outside or maybe just do a combination of both if she likes. What I do with my girl is set up an ex-pen with her crate, peepads, and food/water. I didn't give her too much space in the beginning and she grasped the concept of using the pads right away. Now I've expanded her cage to full size and she still gets it. I had gotten to the point of giving her free reign of the house (leaving the ex-pen door open) and she was still consistantly using her pads. Now she broke her leg and has to be confined so she's back in the ex-pen. Ex-pens and pee pads are super handy though. I don't find them stinky at all. I pick up the poops immediately and the pee gets absorbed into the pad.
