Can we smell in dreams? I'm interested in whether people can smell in their dreams.
Do people really experience smell in their dreams?
For example, if I dream of smelling a flower, will I feel the smell, too?

Is there any research on whether people can smell in dreams?
Antonio, Nielsen and Doneri (1998) provide one assessment of self-reported  prevalence of smell in dreams. To quote the abstract (my bolding):


  Although numerous studies have investigated the content of 
  laboratory  and home dream reports, surprisingly little  is  known
  about the prevalence of various sensory modes in  dreams. 49 men and
  115 women completed a battery of questionnaires and kept a home dream
  diary for two to three consecutive weeks. Retrospective responses to 
  the questionnaire indicate that  approximately  33 %  of  men and 40% 
  of  women recalled having experienced sensations of  smell  or taste in
  their dreams. A  total  of  3372 dream reports were collected and
  scored for  unambiguous references to  auditory,  olfactory,  and 
  gustatory experiences. Auditory  experiences were reported in 
  approximately  53%  of  all  dream reports. Olfactory  and gustatory
  sensations occurred in  approximatdy 1 % of all dream reports. A 
  significantly greater percentage of women than men reported one or
  more dreams containing references to olfactory sensations. The results
  lend support to  previous studies which have shown that a variety of
  sensory experiences, although relatively  rare, can occur in dreams.


There is still the question about whether self-reports are trustworthy, and how you define a smell experience in a dream that is most likely not generated by external stimuli. Antonio and colleagues go on to discuss some of these issues:


  That  the more infrequent modalities of  smell and taste occur at all
  in dream reports is an important indication of the representational
  capacities of dreaming-and  probably of  imagery more generally. The
  finding  is consistent with  recent research showing the existence of
  imagery in both olfactory (Carrasco &amp;  Ridout, 1997; Lyman &amp; McDaniel,
  1986) and gustatory (Drummond,  1995) modalities. Although  some
  researchers take the position that olfactory imagery is not possible
  (Herz &amp; Engen, 1996), the spontaneous occurrence of olfactory imagery
  in  dreams may differ  from "willful"  olfactory imagery that may
  occur upon instruction during  the waking state. For  instance, limbic
  structures which  might  yield  such spontaneous occurrences during
  dreams may not be operational during the waking state. Nevertheless,
  it  is  likely  that  the  relatively rare occurrence of  these
  modalities during dreaming is not  because their  representation is 
  beyond imaginal capacity. Rather, either such sensations are not
  usually spontaneously  generated during dreaming, i.e., are not a
  necessary component of dreaming's supposed memory/adaptational
  functions, or they depend upon external sensory stimuli to trigger
  them. However, sensory triggers may be selectively blocked at  the
  thalamic level by the raised afferent thresholds of REM sleep (e.g.,
  Steriade, 1994). Of  course, both  of  these inhibiting  conditions
  may be true, thereby seriously disfavoring appearance of gustatory or 
  olfactory sensations during dreaming


References


ANTONIO, L.Z. and Nielsen, T.A. and Donderi, DC. (1998). Prevalence of auditory, olfactory, and gustatory experiences in home dreams. Perceptual and motor skills, 87, 3, 819-826.PDF
Carrasco,  M.,  &amp; Ridout,  J. B. (1997)  Olfactory perception and olfactory imagery: a multidimensional analysis. Journal  0f Experimental Psychology: Human Perception &amp;  Performance,
19,287-30l.
Drummond,  P. D. (1995)  Effect of imagining and actually tasting a sour taste on one side of the tongue. Physiology &amp; Behavior, 57, 373-376.
Herz, R. S, &amp; Engen,  T. (1996)  Odor memory: review and analysis. Psychonomic Bulletin &amp; Review, 3, 300-313
Lyman, B. J., &amp; McDaniel. M. A. (1986)  Effects  of  encoding  strategy  on  long-term  memory  for
odours. Human memory. Quarterly Journal of Experimental  Psychology: A-Human  Experimental Psychology, 38(4-A), 753-765.
Steriade,  M.  (1994)  Brain electrical  activity and sensory processing during waking and sleep states. In  M.  H. Kryger, T. Roth, &amp;  W. C. Dement (Eds.), Principles and practice of sleep medicine. (2nd ed.) Philadelphia, FA: Saunders. pp.  105-124.