This just in: I'm also featured on Robin Leigh Morgan's website and blog! Go take a look, and also check out her YA paranormal romance, I Kissed A Ghost.
Some time ago, I promised a post on why there aren't any elves, fairies, or dragons in my stories. The short answer to this question is, because so far I haven't seen any reason to put any in.
The longer, and hopefully more interesting answer is: When I'm reading a novel and come across a character of a fantasy race (elves, fairies, dwarves, etc.) I almost always find myself asking, "Why isn't this character human? What makes this character something besides a human with heightened senses/love of nature/pointy ears/superior attitude or short/has a beard/likes beer/lives underground?" I find humans fascinating. They come in an endless variety of physical types, temperaments, talents, prejudices, emotions, desires, abilities, habitats, backgrounds, beliefs, and so on. I've found enough to write about just with humans as characters (and, ok, gods here and there, but there's good reasons why gods are gods) without adding the artificial differences of designating them as "elves" or "dwarves" or whatever. If there are going to be different races, for me there has to be a significant reason that matters to the story why those characters cannot be any sort of human.
The best example of this I've ever read is the Danae in the Flesh and Spirit/Breath and Bone duology by Carol Berg. The Danae are an elvish/fae-like race with a superficial resemblance to humans. However, everything from their physiology to their ways of interacting with and affecting their world are completely alien. (Although their biology is close enough to allow them to interbreed with humans.) Their stages of growth are marked by increases in magical abilities, and the appearance of really cool glowing blue tattoo-like markings on their bodies. Their way of getting around their world and ours is not limited by things like physical location and distance but relies more on the resemblances between one place and another. Their magic is based on dance, and their dances have a very real effect on their world and the human world. And the list of fundamental things that make the Danae who they are and not human goes on and on. Their very unhumanness (yes, that's a word, I'm a writer and I used it, that makes it a word) is a pivotal point in the story and has a profound effect on the main character.
Another of my favorite examples of the use of fantasy races is in The War of the Flowers by Tad Williams. I read this a number of years ago and don't remember a whole lot about it, but I do remember that the differences between humans and the various fantasy races in the book went a lot deeper than just name, appearances, and general outlook on life.
If I ever write a story where it's essential to have a character that is non-human on a very deep, fundamental level, that has differences from humans that go beyond the wide variety of characteristics that humans already display, then I'll do that. But so far, just plain old humans have been keeping me plenty busy.
But what about dragons? They're clearly not just humans that are lizard-shaped, scaley, have wings, and breathe fire. But a lot of other people have written about dragons, and written about them far better than I ever could, so I don't really feel like that's something I need to push myself to do. If I ever have a story idea that requires a dragon, I'll use a dragon. But so far I haven't.
My favorite stories with dragons? A Wizard of Earthsea and The Farthest Shore by Ursula K. LeGuin. Great dragons, not at all pets or just dragony humans, but with their own history and way of looking at life and the world. I also enjoyed Song of the Beast, by Carol Berg. (btw, everything Carol Berg writes is awesome. You should read it.) (also btw, an older edition of A Wizard of Earthsea has one of the worst covers I've ever seen. Go check it out if you dare, but remember, what has been seen cannot be un-seen.)