There's also various disorders that produce dwarfism and giantism and other forms that might have looked like mythical creatures before medical science knew about these things.
Also, I like the mythical cyclops could have been from dwarf elephant skulls theory: http://www.users.globalnet.co.uk/~loxias/cyclops02.htm
And hobbits! The BBC article Homo Floresiensis. From Wikipedia ( http://en.wikipedia.org/wiki/Homo_floresiensis )
Homo floresiensis ("Flores Man", nicknamed "hobbit") is a possible species, now extinct, in the genus Homo
Similarly Dragons could be the result of ancient man finding dinosaur bones and extrapolating what the creature must look like (a creature with bones made of stone could surely breath fire).