I'll throw Rottweilers into the mix here because I had one that was a great watchdog.
Rotties, like Pits get a bad rap, mainly because of irresponsible owners and breeders. A well bred and trained Rott is an amazingly loving, obedient, and protective dog. Their herding instincts tend not to be as aggressive as smaller BC/ACD type dogs, so they tend to be easier with family kids. If you want a dog that will scare the BeJesus out of an unwelcome intruder, a snarling Rott mug is the canine equivilent of hearing a pump action shotgun rack a shell. My female Rottie was an imposing figure to any unknown person in our yard. If startled she would growl and bark, unless I was there to say "He/She is o.k. Friend." She was not aggressive but WOULD attack on command. She sure as hell looked aggresive though
Pit Bulls can be good guard dogs, but are unfortunately a liabilty (through no real fault of their own), for the most part they are sweet dogs and very protective of those around them. I personaly am not crazy about them, but only because of asthetics...has nothing to do with the breed.
If you need a dog with good alert instincts and the muscle to back up a threat, Rotties are a good choice. Do NOT get a Rottie and chain it up. Rotties require obedience training and activity to keep them from becoming bored...they are extremely intelligent animals.
That said, being a defense/gun guy my "guard dog" needs have changed over the years. Nowadays I simply need an "Alarm Dog". If I was away on travel like I was years ago I would want a Rottie (or breed the others have discussed) at home to protect the family. Now I'm home every night, so all I require is the best early warning dog I can get.
For that reason I chose a (mixed) herding dog, medium sized. My 3YO son is scared of "BIG dogs", and since a Rott would be overkill anyway I searched out and found mixed breed dog that had some Rott and herder in it. Just like the blind BC story, herding dogs have excellent hearing and are very vocal when they perceive a threat. You need a some room to let them burn off their ample energy, but they are very protective of "their pack" and smart, funny, and sweet. They also excell at agility and flyball if you would want to do any sporting activities with your dog as well.
I really like Heelers/Australian Cattle Dogs. Be warned that they do need good training and socialization as they have VERY strong natural herding instincts. Trained, they are sweet and protective dogs that have great personalities.
Boarder Collies are good alarm dogs too, but be prepared to work with them and exercise them a fair amount as they have boundless energy.
I also have seen very protective Shelties and they are sweet family dogs.
Best advice I could give is to find an AKC dog obedience/agility show and talk to a bunch of people. If you find a purebred you like then there ya go...if you find TWO you like, try and find a mix.
I ended up with what I think is a Rott/BC mix and she's perfect for the house.