Subject: How to define a species?

Hello!

A debate I had a while ago sparked an idea - but first, here is what I 
understand to be the definition of a species:
Two individuals (of opposite sexes) can be said to be of the same species 
only if they are able to reproduce naturally, and their offspring are not 
sterile. 
The idea was that if the definition of a species is contained within that 
sentence, the animals we call dogs are not really all of the same species 
- Due to the sheer difference in size, I can not imagine a Chihuaua and an 
Irish Wolf Hound naturally producing offspring...

Is my thinking correct (if so, the splitting of the dog breeds into 
separate species would be a valid example of evolution on macro scale)? 
When can we say that two populations formed by splitting a population of a 
single species have genetically drifted apart enough to call them separate 
species?

Re: How to define a species?