I agree with Rodney that it doesn't really matter if we're dreaming or awake. This reality is all we know and therefore it is reality. Now if another reality were to present itself, then the question would have a lot more weight to it because you would have to choose which reality was real and which one was the dream.
That being said, I think that this is a very valid question for philosophical pondering even if it doesn't really affect anything. I remember wondering as a child if I were the only real person in the world and everyone else was just a figment of my imagination. Now that would be one weird dream to wake up from!
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