A phobia is an irrational fear of a specific object or situation. Specifically, cynophobia is the fear of dogs.
It is thought that the more people develop cynophobia because of a negative experience--usually during childhood--than for other reasons. However, other causes can include an observation of a situation involving a dog. It does not necessarily have to be a negative situation, it could be that the child is unable to accurately interpret the dog's behavior and percieves something such as a dog jumping up on someone else as negative.
Another reason for the development of this phobia can be information obtained outside of observation and/or personal experience. This could include things such as movies (think the 1983 film Cujo), adults telling a child a certain dog is dangerous, or other informational sources.