Both Dream Sprite and Decoy Dragon can change the attack target of a monster and if Dream Sprite was used to change the attack to Decoy Dragon would Decoy Dragon be attacked or would Decoy Dragons effect take place?
In short, Decoy Dragon would be attacked, due to an important part of Dreamsprite:
This means that damage calculation must be immediately performed, so the Battle Step has been skipped. As Decoy Dragon's effect is activated "when this card is selected as an attack target by your opponent's monster", it is only performed on the Battle Step (as that is when it is targeted), so is not activated in this case. An official ruling also backs this statement up:
To back this up further Konami has also ruled the following two things about Dreamsprite:
This means that Decoy Dragon would NOT be being targeted by the opponent's monster, but by Dreamsprite's effect.
This further emphasises the point that the Battle Step is ended due to the effect.
I hope this helps!
Source: Konami's Individual Card Rulings (web archive version as it has not been online since early 2013): http://web.archive.org/web/20090218205242/http://entertainment.upperdeck.com/yugioh/en/gameplay/faqs/cardfaqs/default.aspx?first=D&last=E