I like the idea of the ocean being a really scary place. It's a vast environment completely alien to terrestrial life - far more so than the sky, the only other major environmental 'realm.' I like the atmosphere produced in settings where the ocean is this huge place where all sorts of mysteries, creatures and even places can be hidden away. People are (almost entirely) forced to travel over it on clumsy vessels, rather than through it, with little or no knowledge of what's passing over them. Then there's the risk associated with ocean storms being much more dangerous than terrestrial ones - you have to deal with waves, capsizing, being blown overboard, etc - and in a fantasy settings throw in all sorts of other dangers.
I think that, without actually being more powerful, a 'sea dragon' should be even more formidable than its other counterparts - simply because people are not cut out for combating sea-based threats; it's as alien an environment we can find without actually leaving the world... Magic should be equally capable of dealing with any dragon, though.
So basically, I think sea-creatures should be even rarer than their terrestrial counterparts, but contextually even more powerful. After all, nothing but another sea-creature, a magically-enchanted unit, or magic itself can effectively combat something that's attacking your boat from underwater. And any sufficiently large or powerful creature shouldn't find it difficult to poke a big enough hole in a simple wooden ship's hull to sink it in short order.
I just hope water combat and water as a playable environment (both above and below!) are added in at some point in an expansion; or at least in a mod.
