Dana Pruitt was the first girl that Shawn had a real crush on. He tried to impress her, but his reputation as a ladies man preceded him and she was not interested. When Shawn made a picnic for her outside of Chubbie's in the freezing weather, she was impressed and finally agreed to be his girlfriend.
Once together, they had concerns that Dana's mom, Susan, and Mr. Turner (who was caring for Shawn at that point) would date each other, making their relationship a bit awkward. It was a false alarm, though, and nothing happened.
After that, Dana Pruitt disappeared until First Girlfriends Club where she tried to wreak havoc on Shawn for breaking up with her after giving her false hope of a real relationship. The details of their break up are never revealed. (It is likely that this is a continuity error)