We just noticed it this morning. seems to have gotten more red now.

What type of food/water bowls do you use? If it's plastic, it might be some kind of allergic reaction to it and you could just change to a ceramic/stainless steel bowls. If it's not that, it might also be canine acne caused from Staph bacteria causing an irritation on his lip. If that's the case, you should take him to the vet to diagnose correctly and give you any antibiotics or proper medication. Although, these are just my thoughts of what might be since I'm no expert.

Could also be Canine Oral Papilloma (warts). Is there any in her mouth? If so eventually they will start going away on their own. Could take a couple weeks or a couple months, if this is the case then the vet's cannot do anything, the best they will do is pop a couple to speed up the immune system. Once your dog builds an immunity to these, it shouldn't get it again. They are contagious to other dogs; though not dangerous.

But my pug does get one's just on his chin like that and the vet says it is just acne.

oh great.....contagious....Peanut has been playing with Mia all weekend. If it doesn't go away in the next couple days I guess I will be making a vet visit. great....more $$

If it is what I said then the vet probably won't do anything about it, it's just something their immune systems need to overcome themselves...but if it is something else they may help! Check the inside of her mouth and gums for any, they may look like cauliflower.

I would be taking Peanut to the vet rather than asking on here, we're not trained professionals. It's always best to consult a vet in person rather than asking for advice, yes it costs money, but you get an animal knowing that they can have unforseen things happen to them - just like kids!