My little Cav has a grade 4 in her left leg and a grade 2 in her right. My vet said that most vets won't do the surgery unless the dog is in obvious pain all the time (he was of course speaking to smaller dogs.)
He told me that her left leg stabilized on it's own and the right leg will do the same. He did suggest Glucosamine,which has helped Lucy a lot. He told me to let her be a normal dog, running, jumping is fine. Eventually the knee with become worn down and pop in and out until finally it will stay out, but the leg will be fine, unless something unforeseen happen.
So unless you dog is in constant pain surgery isn't really necessary. Of course keeping your dog a healthy weight is vital.