OK...I want to move to the UK...as I've said before, they seem to have much more choice! Top Shop, Next, a variety of brands from Marks & Spencer (including Per Una, which will launch its petite line very soon) and Petite Affair, an online store started by a woman who is 5'1". According to the site, they test clothes on real petite women (which they define as 5'3" or shorter, one inch less than the American definition) and if it doesn't look right, they'll just change it. Their sizes start at a UK 6 and go up to UK 18 in some brands (most go up to a UK 16). The clothes, which range from work clothes to casual to "occassion" certainly don't look granny and they seem to have a decent choice. I have to say that I LOOOOOVVEEEE the yellow dress on their main page (though it probably isn't the best colour for me)!
In addition to their own private label, Petite Affair also sells other brands, such as Almost Famous and Turnover. Petite Affair's dress pants inseams come in both 27" and 29" and jeans come in three sizes: 28", 29" and 30".
It's interesting to read in the FAQs that some believe that the choices are limited. It really isn't that bad. At least they go beyond basics.