On using dreams
Although dreams are rarely organised enough to be set down as a complete story, they can be certainly a starting point for a story idea.
When I'm in between books, I sometimes dream of complete stories, often presented in a film, and usually in an entirely different genre than I write in, such as murder mystery. I've never followed these up, but if you're searching for ideas and this kind of thing happens, why not try it?
I used a richly symbolic dream of my own as the basis for Sally's Painting Room. The dream was about scrubbing away the garbage surrounding the trauma of a car accident, in order to get into my writing room. The book, an early reader, translated this literally to a small child cleaning out a hidden attic room to make it into her own painting space.
Dreams appropriate to the characters can also add depth to novels. I used a slightly modified version of the same dream in the novel Peeling the Onion, which drew on my own accident and recovery, though written in the persona of a seventeen year old girl.
Occasionally, at the stage where I'm totally immersed in the story, I've had dreams that seemed to belong to the character rather than me; I've used one in a work in slow progress, and another, totally inexplicable dream of flying over a landscape that I later identified as southern England, in my novel The House at Evelyn's Pond.
So, although as a general rule it's best to avoid solving a story with 'and then I woke up', don't be afraid to use a dream as a jumping off point as an idea to explore!