dragons are pretty darn strong !

They are made to be tough, if you can't beat them on story missions then level up a bit cause the first time through the game the levels have a cap meaning you can out level the story missions. Also Ranged units tend to the best in the game in terms of damage output and survivability, try not to stand toe to toe with tougher animals like dragons unless you plan on capturing them whioch requires a certain class and patience.

Also though you should get them til later having undead characters as frontline troops tends to do well since they can't 'die' just make sure they cant be banished.

Read these...

Crafting Guide - http://www.gamefaqs.com/psp/999440-tactics-ogre-let-us-cling-together/faqs/62110
Crafting like you asked in another forum question.

Recruitment Guide - http://www.gamefaqs.com/psp/999440-tactics-ogre-let-us-cling-together/faqs/62135
Allows you to find generally more powerful unique characters

Class Guide - http://www.gamefaqs.com/psp/999440-tactics-ogre-let-us-cling-together/faqs/62169
This is especially useful for maximizing your armies potential.

Decision Guide - http://www.gamefaqs.com/psp/999440-tactics-ogre-let-us-cling-together/faqs/61441
small guide for making key decisions and where and what battles you face because of them.

Hope this helps, welcome to Tactics Ogre.