I have never heard of vasectomies for dogs. I do know that sometimes the sack might be swollen after a neuter leading people to think there are still testicles in it. Usually it shrinks after a while.
I just found the following link that suggests that some vets do vasectomies, and while it may prevent mating, it does nothing to change the drive or the possibilities of cancer later on:
http://www.peteducation.com/article....2+2112&aid=911