In the original AD&D Monster Manual the kobolds look like anthropomorphic canines completely covered in scales, with small horns above it's brow and a tiny but distinct ridge of bony protrusions along the back of the skull, topped off with a set of pointy, but not very canine ears.
In mythology (well, in one of my mythology books anyway) they are described as short, wrinkled, germanic brownies that help out around the house, as long as a saucer of milk (or similar gift, I would imagine) is left out for them each night. If the gift isn't left out, they pull mean-spirited pranks on the household, like pulling chairs out from under people as they sit down.
In my (forever) upcoming campaign I think I will have them sound like canines, but make it clear that they are not. The reason for this being that I will have at least two canine races figure rather prominently in the campaign, a third is just too much.
I wanted to use them because
A: a lot of players are jaded and see kobolds as a non-threat. And...
B: Orcs, ogres and some of the other usual mid-difficulty baddies are used way too often (or were, at least, in the last game I was in)
I want to use goblins and kobolds together and give them levels in various classes to make them a real threat, even at high levels. The kobolds being a more powerful race, subjugated (but still feared) by the goblins through oppression and sheer numbers.
I hadn't yet put much thought into what they would actually be though. Maybe as some missing link between mammals and the last of the dinosaurs. Though after reading what mythusmage wrote I think perhaps I'll have them related to spiny echidnae.

Heh, most of my players probably don't even know what an echidna is, let alone their characters.
And the kobold leader will be named Knuckles...
J/K
