I have chickens (and ducks). They can get a bit smelly in the heat, but nothing unmanageable. I used to let them free range around my front yard as well, but got tired of poop all over, so they are now in the backyard most of the time.
We clean the coop about once a month....but they are only in it to sleep and lay, the rest of the time they are loose. The grass will be gone pretty quick if its a small area and just dirt can get a little gross. I have been using hay, but if the area was smaller, I would probably go with sand. Though the hay is nice because we just rake it all into a pile with the rest of the compost.
They really are great fun. The first ones I got (3 years ago) know their names and will come when called. The rest all come to "here girls!" and a couple know their names.