I've had 2 dogs that have had a testicle that wouldn't drop - one Yorkie and one Sheltie. I always spay neuter anyway, so it was no big deal. I'm sure your baby will be fine, just make sure your vet is familiar with working on small dogs...
BTW - the Sheltie is a healthy 13 yr old now.... Good luck, and remember it will be harder on you than on him...