Smaug is, for me, the definition of a true dragon. He tends to be the dragon by which I judge all other versions of dragons I've seen. I also hold Verminthrax from Dragon Slayer in high regard in how a dragon should be presented. Saphira from Aragon comes in a moderate 3rd. Though I try not to think much about the movie, the dragon voiced by Sean Connery from Dragonheart comes to mind when I think "dragon".
So for me, that means its got to be a fire-breathing, armored and winged beast of doom. That can talk. And while it isn't mentioned of Smaug, its very existance is magic. Whether that means magical abilities or actual spell use doesn't matter; it just needs it.
I don't have a problem with dragons that don't talk or don't seem to be intelligent - like the Norweigan Ridgeback of Harry Potter or the dragons of Reign of Fire, (or sadly, the dragons of the 1st D&D movie) but in a game like D&D, those aren't true dragons; they're drakes, wyverns, orms, linnorms and the like. Dragon derivatives, but not true dragons. They have their place in the game and make excellent opponents, but they're just not "true" dragons.
I also have to agree about the opinion of fear. It seems more it should stem from a "We're all gonna die" when it lands in front of the group, more than from some supernatural aura the dragon exudes.
I think true dragons should be wondrous, and terrifyingly powerful. At the same time, I think there should be various dragon derivatives (dragon spawn?) PCs can face and fight and tell most folks "we fought a dragon".
And finally, having had a 1st level character (back in Menzer Basic D&D) who had a hand in our starting party subduing a sleeping black dragon, I think the subdual and "% chance sleeping" from earlier editions were horrible.
This whole thing has got me thinking - I believe one of the things I'm going to incorporate into my home campaign world is that true dragons lay many eggs, but perhaps only one of many dozen may hatch to be another true dragon...the others fail to aspire to gather the necessary majesty or power, and are born as lesser things - wyverns, drakes, draconians and other such lesser draconic beasts.