The Dream Dragon by Kathryn England
I should maybe quit reading kids books. I picked up The Dream Dragon because it looked cute and I try to keep an eye out for books my nieces/nephews would enjoy. And it was a fine book, I just felt a little sad for the dragon.
The dream dragon protects the boy's dreams. He scares away the bad dreams, but he also pushes the good dreams to the edge, because he wants to be the dream the boy remembers. Then, a t-rex comes along and defeats the dragon. It is the new protector, but then comes along a superhero, then a pirate, and each, in turn, stars in the boy's dreams.
I like how the book first shows than not all monsters are scary. It also connects what we read about or learn about in real life to our dreams, which I think can be helpful for kids. At least it was when Amber was little. Knowing why she dreamed about something...