Before I read the first book, If I Had a Dragon by Tom Ellery, I had the kids practice making dragon noises. This was accomplished by me holding a dragon and making different farm animal noises, as in: "Does a dragon go 'oink' or does a dragon go 'moo'?" Once the kids "taught" me how to make dragon grunts and such, we practiced "breathing fire" by blowing bubbles.
Then we read The Paper Bag Princess by Robert Munsch, one of my all-time favorites, and Who Wants a Dragon? by James Mayhew. Both of those books had been read at the other dragon storytime I did this year, but because different children were in attendance, it worked out fine.
Our craft project was making Chinese New Year's-style dragons out of construction paper and tongue depressors, which made look like they were moving when the kids moved their hands. It was pretty fun.
All in all, I think everyone had a great time.