bmetros, I was in a similar situation when we acquired our 26ft boat. I opted for a small Mercury inflatable, Airdeck 240 with a Mercury 3.3hp outboard. The dinghy is relatively small when stored on the swim platform. The engine, weighing under 25lbs is stored in a seat locker.
I've managed to use this set-up fequently with great success. I purchased both the dinghy and engine used for less than $1k. It was suggested to me, when I was shopping, buy quality - that way its easier to upgrade!
Buy the largest dinghy your boat can carry. Don't be fooled by the people carrying capacity - its all relative. Our dinghy is rated for 3 persons, we've carried 4 adults, and cruised comfortably with two for a few miles of gunkholing.
If you plan on rowing your dinghy, be sure to look at the inflatable keel models, they track better than flatbottom boats. Worse case, consider a 2 -4 hp engine - you'll never row again!