I have owned a Sheltie and my mother has a Shi Tzu.
The Sheltie is a working dog and needs to be given work to do. This can take the form of good obedience training; they will understand that their "job" is simply to love you and obey you, if you stimulate their minds by teaching them new things regularly.
Shelties that are hyper are shelties that are repressed. They are not given proper outlets to their desire to bark, or else they are not given a job to do; thus, they decide that their "job" is to bark at things. I gave my sheltie specific instructions about when to bark and when not to bark, so there was no confusion (simply teaching "barking is never OK" will result in an upset dog and not stop the barking). She could bark at the coffee grinder and the garage door opener.
The Sheltie is an amazing companion when taught and directed in this way. Their loyalty is boundless and their intelligence sufficient to make them a real friend, and not just a pet. They are small enough to keep exercised just by playing fetch along a long hallway or a small yard. Can you tell I loved my Sheltie?
If what you want is a friend and playmate (or dare I say Partnet?) then you want a Sheltie.
My mother's Shi Tzu is something else entirely. A Shi Tzu is NOT a working dog and has no understanding of WHY thei should obey commands. They can be convinced through extensive training but in general, while you canr ely on them to be well-MANNERED, you cannot rely on them to be obedient to commands.
This being said, they are incedible cuddlers. They are the result of thousands of years of patient Chinese breeders creating the ultimate baby substitute. Everything about them, from the way they prick their ears to the littlest wiggle of the tail, is designed to be cute beyond the definition of the word. Their joints and muscles are soft, feeling more like a cat than a dog, and they are completely comfortable held on their back or snuggled in whatever way you might want. If what you want is a cuddle companion, then you want a Shi Tzu.
Both dogs are gentle enough to be around kids, but the Shi Tzu will find them annoying if they try to play too rough. The Sheltie is excellent with the very young and those old enough to be responsible; they are like sweet nannies to infants and toddlers, and are respectful of preteens. However, the in-between can create problems, as the child tries to play and the Sheltie tries to respond; either the child will accidentally step on or hurt this small dog that looks and plays like a big dog, or the Sheltie will attempt to "herd" the child and frighten them (NEVER hurt them). This can be avoided by supervising the two of them together until they have gotten to know each other a little.
Both of these breeds suffer from excess popularity, sadly. Thus, you must do your research VERY well. Meet as many adult dogs from a breeder as you can, preferably siblings and offpsring of the parents of your potantial puppy. In Shi Tzus, watch out for stubborn and willful disobedience (little tyrants); in Shelties, watch for yappy, high-strung dogs or, in recent attempts at correcting this, lumpy fat dogs. These faults are NOT part of the breed: they are the result of poor breeding practises, and need not be tolerated.
I would heartily recommend either breed, it just depends on your intended purpose for your dog.