Where does your dog sleep?

In the spare bedroom in crates. The girls share a large crate and my minpin sleeps in his own since he is  a selfish snappy sleeper lol. He's been known to bite whoever is near him when he's sleeping or at least give a good "get off me!!" growl.
 
The minpin is 10 and absolutely cannot be trusted in the house if we are gone at any time. He is always crated at night and when we are out of the house. He'll pee everywhere.
 
The bichon girls are 5 and 7 and one honestly could be left out both times, except she's a bed hog and sleeping comes highly prized by the humans here.  The other would pee anywhere randomly, especially since she is the type that doesn't like wet grass, dry grass or any grass   Crating her helps her to know that she has to potty outside  
Works for our family.
 
And I think to the OP, your friend is projecting human emotion onto the dog. If the dog is happy sleeping on various beds around the house, fine.

Both dogs sleep in my room at night. Cassidy sleeps on her bed on the floor, and Mirelle now sleeps on her bed in the corner of the room, tethered to my closet doorknob. She outgrew her "bedtime" crate, and since I don't feel like dragging her regular one downstairs every night, I just tie her next to her bed, to keep her from wandering. She's 7 months now, but if left loose in my room would probably chew on stuff, bother Cassidy so none of us could sleep, and have an accident if I didn't let her right away after she woke up. Cassidy is allowed on my bed, but she only occasionally comes up now, she prefers her bed, I guess. Mirelle is not allowed on the bed; this is because she's going to be a service dog and they don't want the dog getting on the furniture without permission, which is ok with me. It is  kinda nice to not have to change my sheets so often because there's dog hair all over them. [] lol

Three of my dogs sleep on the bed with me and under the covers when it gets cold the 4th has always slept on his own bed next to mine.

Mine sleeps outside in the backyard. He has a huge big kennel with his bed in it but only sleeps on the bed if it's pouring rain otherwise he sleeps in the middle of the yard on his back with all four legs in the air. During the day he has naps any where around the house he chooses.

Right now my dogs sleep in the basement in crates.  Its cooler for them.  Hopefully when we move into the new house, we will get an airconditioner so they will be more comfortable upstairs with us, but they will still be in crates.  Its where they feel safest.