I had a look to see if there was any published research on this subject, and found:
Olfactory Dreams: Phenomenology, Relationship to Volitional Imagery and Odor Identification. Richard J. Stevenson and Trevor I. Case. Imagination, Cognition and Personality. Vol 24 no 1, 2004.
They suggest that a sense of smell in dreams may be connected with higher emotional content, either positive or negative. The between-participants statistical test saw a statistically significant correlation; the within-participants test saw a correlation that was too small to be statistically significant.
So there is some evidence for this theory, though it’s a bit inconclusive.
The association of smell with both negative and positive emotions fits with Siiw’s dreams where she smells smoke. (They’re examples of smell + highly negative emotion).