First off, every cavalier has the right to be loved and cherished and I am sure you will do that with Daniel.
No one is criticising your own cavalier when they tell you where puppies sold in pet shops come from. Many of us start our love with the breed from having seen or bought a pet store dog. Others of us have rescue cavaliers from unknown backgrounds, many of them ex puppy mill dogs, and we love them just as much as our dogs from reputable breeders. But one reason for this board is education -- in particular to help people understand why it is so important to look for a reputable, health focused breeder and not support pet shops, backyard breeders, or disreputable breeders -- and how to identify the latter (they can do a very good job of making people believe they are good breeders when in fact they are not).
Pet shops know you will have a hard time walking away from their cute puppies and will part with cash that you shouldn't part with -- because it continues to support a horrific puppy mill or backyard breeding system that you can read more about here. The pictures say it all. Many of us here on the board have seen these places with our own eyes, in the US, Canada, UK, Ireland and elsewhere and pictures and films cannot do justice to how awful they are. Cavaliers are a very popular breed to 'farm' in this waybecause they are expensive in the US (not so much in the UK or Ireland but they are still a lucrative and sad 'crop'):
http://stoppuppymills.org/pet_store_doublespeak.html
http://www.prisonersofgreed.org/
Pet shop dogs come from puppy mills -- mass breeding establishments where dogs are bred in cages like chickens; at best in sanitary but socially deprived and unstimulating environments where the parent dogs may never see a spot of grass, a normal life or a caring hand -- they are basically just breeding machines and are put down after they have bred as much as they can be bred. Very often the dog are not even kept in minimally OK conditions but appalling situations, crammed into filthy makeshift cages where they defecate on top of each other and where they have so little room that their limbs can grow atrophied.
Occasionally pet shops also get puppies from local backyard breeders. Very often the conditions these animals are kept in is shocking and nothing like the pictures they post about their 'dogs bred inside in a family environment'. In either case the breeding dogs won't be of good quality and won't have AKC or CKCSC (in the US) registration. Sometimes they are registered with the so-called bogus registires as this enables pet shops and backyard breeders to dupe buyers into thinking they are getting some kind of valuable papers. But anyone can register anything for a small fee with these registries -- they only exist to facilitate this whole sad breeding system.
No reputable breeder who breeds for health and conformation (corect appearance and temperament) would ever sell their dogs to pet shops to be sold on by third parties.
There's a lot of information in the Library section on puppy farms/puppy mills, finding a good breeder, and identifying the questionable ones. As others have noted you could easily find a quality puppy bred with careful regard for health and conformation from a show breeder for the price you paid. That's a shocking price for a pet shop puppy biut they know they can get away with it by tugging at the heart strings.
This page explains in detail about what registration means, about AKC registration, and the bogus registries:
http://www.grimaldilabs.com/BogusRegistries.html
This breed has a lot of potentially serious health issues and good breeders breed very carefully, with a knowledge of genetics and pedigrees, to avoid genetic problems that often crop up in pet shop and backyard breeder puppies. For me, this is the number one reason to only EVER support reputable health focused breeders and why I do not allow this board to be used for discussions of breeding because I do not want anyone breeding as a casual affair -- it is a very serious, responsibility-laden activity.
You can read more about these reasons in the Getting Started section.
You do need to be prepared to possibly have some health issues with your puppy as it won't have been bred with any regard for health so be sure you are aware of cavalier health concerns (these are listed in the Library section). I would definitely insure your dog so you have protection just in case problems come up (I always recommend insurance for pet cavaliers anyway but especially for dogs of unnown background). Many pet shop cavaliers will never have any issues at all so this isn;t a given but there is definitely a much higher risk.