Unholy Flying Terrors, Batman!
Okay, this is kind of embarrasing for me, but:
I suck at this game.
Now, some people here seem to think that if they suck at a game it is therefore crappy. I am not of their ilk. In fact, I like this game immensely; it has far more strategy to it than most shooters. But to save my life I cannot get past level seven. I seem to have all the marksmanship of a drunken wombat wielding a paper airplane. I am utterly baffled by some people's complaints that this game is too easy.
Never the less, I think you really have something here. The graphics and sound are solid; the controls are simple, the action is well-paced. I've heard some people complain about the camera moving; frankly, I LOVE the camera; it makes the game feel much more alive and dynamic. Any complaints about not being able to see what was going on should have been dispelled by that handy-dandy radar.
I know you may be getting sick of this project, but if you wanted to make the game more interesting (and I suppose therefore harder...) here are some suggestions:
1) Add a free-play mode for people who want an endless onslaught, (like in the original version) or at least infinite levels.
2) Magic bolt upgrades. Say, hold down Z for fire, X for ice, C for wind, etc. Magic bolts can then have different effects; say the ice bolt stuns them and the wind bolt blows away fire balls and pushes the dragons away from the tower.
3) Alternatively, you could make different dragons, so that the player has to match elemental bolts to dragons to have any effect. (fire bolt on the ice dragon, ice bolt on the fire dragon, etc.) The game HATCH at Eyez Maze plays on this idea.
4) Other spells. Say, you press a key to produce a shield that can absorb one fireball. Or summon some ravens or something to fly around attacking the dragons for thirty seconds. (remember the bees in LoZ: A Link to the Past?) Or maybe a shockwave that pushes all dragons back from the
5) More complex dragon behavior. Say, have some swoop in to fire and then quickly pull back again. Perhaps have some that don't breath fire but try to damage the tower by ramming it or something. Think Super Mario Overrun.
6) Change the magic meter, especially if you choose to add other spells. Instead of having a small meter that has to be full to fire, have a much bigger meter so that different spells can have different mana costs. This would have a big effect on rapid fire upgrades; you'd need one to increase firing speed, one to increase magic charging speed.
7) If you change the magic meter, and keep the same-style firball deflection spell, make it cost mana as well. Maybe have upgrades to give it a bigger area of effect. (like upping the brush size in a drawing program)
7) A sequel with multiple magic abilities could be made much more interesting by making it practical for the player to choose different upgrade paths; (think Project Monochrome) instead of having to upgrade everything evenly, tweaking could allow the player to go for rapid-fire coldbolts or heavy-hitting fire balls.
8) Maybe have to worry about the wizard himself getting hurt as well as the tower. You could have little dragons that swoop down and try to claw his eyes out. Maybe you could buy him armor. Maybe he could hire a knight to stand on the tower with him and try to fend off dragons trying to land.
9) The new story is better, but it could be better yet. Instead of having wave after wave of the same dragon family throwing themselves at him, say perhaps he's somehow gotten his hands on something that all dragons everywhere will want? It gives both the wizard and the dragons more credit.
10) Make the repair price constant. Come on already.
Anyway, I have enjoyed playing this game very very much, and I thank you for making it. Have a nice day.
The Impossible Quiz 
Arrow Wizard 
Dragonslayer v1.2