The German Shepherd Dog is meant to be a working dog. That does not mean that the GSD cannot make a wonderful companion as well. However, due to their genetic temperament and nature they should never be bred for the sole purpose of p pets.
While the breed can make wonderful companions and pets, they should also be able to be more than that if the owner should choose to do more. When someone breeds simply for pets they are leaving out a major aspect of the breed; the dog’s temperament and other traits can suffer when they are ignored. This can be a difficult topic, as when a person is looking to purchase a puppy as a pet, they think they should go to a breeder who is breeding for that purpose. That is far from the truth.
Often when you hear someone say they are breeding for pets, this is because their dogs may make good pets in the owner's eyes but have done nothing else to show that they are indeed breed worthy. While their dogs may be nice pets and appear to be sound around their house and yard, this is not near enough to prove that they should be bred. The problem with this is that most dogs are comfortable in their home environment but many will fall apart and show their true temperament and nerves if taken into an unfamiliar or stressful situation. Most pet owners loves their dog(s) and think they are a great pet, but they lack the experience to evaluate the dogs true temperament, nerves and other characteristics for breeding purposes. You will sometimes see an owner claim that their dog is a "great pet" even though the dog is scared to death of fireworks, hides when it storms, is unable to be trained properly, will aggressively go after other dogs on a walk, is scared or nervous of strangers coming into the house, etc...
If their dog lacks the temperament and other characteristics to handle these unfamiliar and stressful situations, then they will be much more likely to produce these issues in their puppies. Unfortunately you are not able to know what the dog will be like in these situations unless you have the dog tested and proven. This is where titles come in to help test and prove a dog’s breed worthiness.
In every well bred working and show litter, there are always puppies that will make wonderful companions. A good breeder is able to evaluate each puppy in a litter and determine which type of home is best for that individual puppy.
Since there are plenty of pet puppies born to well bred working and show litters as well as the pets available in rescues and shelters, there is absolutely no reason or need for someone to breed for the purpose of producing pets. Breeding only for pets goes against what the breed is and should be. Remember, you are much more likely to get a good pet for your family from a good breeder that breeds correctly (by testing/proving their dogs) than going to a breeder that claims to breed for pets.