http://www.caninepapillomavirus.com/canine-papilloma-photos/
This might sound funny, but dogs can get Canine Papilloma Virus (warts). Usually you can pull one or two off and be fine, but mostly you just have to wait until they clear up on their own. They don't cause any problems unless they spread to the back of the throat and obstruct breathing. They're pretty contagious, so you have to keep your pup away from other dogs, but from what I understand, they are like Chicken Pox and only break out one time.
Check out the link to compare pictures with what you found on your dogs lip...:
A very rounded shape does sound more like a kind of cyst. Some cysts are sensitive, and some are relatively painless. Can you move it around at all or get your fingers kind of underneath it? Or does it feel firmly attached to the lip?
I really can't tell you what this is. My first line of defence with my own dog (who is lumpy as a rice pudding!) is if I am not absolutely certain from previous experience of her other lumps and bumps, I take her to the vet to get the 'newest' lump fully checked out.
She had a tiny lump removed (which when gently squeezed, nothing came out of) from her upper lip a couple of years ago. That was not exactly cyst-like, and so neither myself nor the vet was sure what it was, We opted to take it off rather than do a needle biopsy, to save time, pain for her, and money. It turned out to be an infected hair follicle.