3 out of my 4 cavaliers went to doggy day care when they were puppies. It is a great place for them to be socialized to all size dogs and other people. They also have so much fun playing, that they are calm at home and easier to train and take care of. Also, puppies get themselves in so much trouble, it is great to know that they are being taken care of and having fun while I am at work or out shopping. I have also used day care for an adult Vizsla that had separation anxiety. It really helped him and gave peace to the neighborhood. His constant barking while I was away was driving my neighbors to distraction.
When Merry & Pippin went to day care, it was a small place like the one you toured. I would just speak to the owner about your concerns about your guys be safe with the larger dogs. What my experience was that my cavs played with jack russells and shitzus and other smaller dogs in a separate area. However, as my cavs got more used to things they were often playing in the big pen with the big dogs.
Currently, I am taking Jolly to a bigger day care and they have 2 separate play areas. One for puppies and gentle adult dogs and the other play area is for the rougher playing dogs. They always have staff members in the dog play areas. The dogs are never unsupervised. The price is $20/day if you go 1-2 days a week and $15/day for 3-5 days per week.
You did the right thing in touring the place. I do the same. You need to feel comfortable with the place and the people taking care of pets. If you are not comfortable, don't do it.
Charleen and Cav's: Pippin (ruby male), Merry (b&t female), Luke (blenheim male) & Jolly (tri male puppy)