Several breeds have different sizes (Schnauzers for example) and i would imagine they get this from breeding them to be like that (maybe??) and I think they'd be great for someone who wants a little lap dog!
While it is true that many breeds have different sizes, these size variations were created over time by careful breeding, not just by picking out runts of the litters and breeding them as they do with Teacups. This about this in the context of breeding any other animal, and you'll see how it could be a bad idea; if you were breeding livestock, or birds, or even fish, would you go for the biggest, strongest, healthiest animal you could find, or would you go for one with a genetic defect that causes them to be severely undersized?
Also, as mentioned in some of the above posts, teacups do have a higher instance of health problems then thier larger cousins. Most of that is due to poor breeding, since not a single reputable, responsible breeder out there would create them. I'm sure if someone really wanted to, they could create a much more stable "teacup" line by breeding responsibly from sound dogs, but the breeding community allready recognizes that it shouldn't be done due to the heightened chance of health conditions, since all defects including size often come with other, less visible ones.
As a side note regarding mutts, while mutt puppies are definately a crapshoot... any puppy is. You may have a better idea of size, temperament, etc. if you go to a breeder... but then again, if you go to a CRAPPY breeder, you still don't really know. My dog came from a very lousy breeder, and is way too big for the standard, doesn't even look purebred, has a horrid temperament, and just about every health issue on the face of the planet. But as a puppy, he looked like he was going to be a small, healthy, happy dog. What I am trying to get at is, one benefit of mutts is that you are not getting them from a breeder, so they don't have to be a puppy. You can go to the shelter, find a full grown young dog, spend time with it to get to know its temperament, ask the shelter about any health problems that showed on his vet check, and know before getting the dog what it looks like, how its personality is, what health problems it has, what training it still needs - basically everything about the dog short of how it will do in your home - before buying. To me, that sounds like a much surer shot than buying a puppy, especially if you can not afford the luxury of going to a truly responsible breeder.