I don't think dragons were that evil, just very egoistic. Just take a look at Glaurung. He took Nargothrond and the entire treasure for himself. Same with Smaug. Sure, they might have been evil too, but the balrogs tortured elves and men in Angband.
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Thus, we must look to the other weapons that they possess. Dragons can use their teeth, claws, tails, and size. Balrogs, however, have a whip of flames, a mane of fire, and...a sword like a stabbing tongue of fire. The only non-fiery weapon a balrog is seen to possess is Gothmog's black axe.
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Balrogs had steel claws. But I think the dragons main weapon was their intelligence. Some balrogs might have been intelligent too (Gothmog was the commander of Morgoth's army in the Fall of Gondolin), but I think dragons were generally more intelligent. Therefore they could cast the "dragonspell".