As mentioned above dog should be on shorter leash. You need to have more control of it. The old man is right and everybody has a right to walk safely on the street.
Get control of the dog or else put it down. Your wife's mental state is more important than your dog. If I was the old man I would have reported you to Animal Control but don't know if you have an organized dog control program. Plus you could be sued by the old man.
Good luck if you keep the dog. Same thing will happen again unless you change something.
