I love wolves, and I love monstrous demon wolves. So Wargs are just fantastic. These creatures originate from the Norse mythological legends of Fenrisulfr, Hati and Skoll. The Norse and old English word for wolf is warg or vargr. They appear as well in Tolkein's Middle-Earth, and so though I have a great love for Smaug, I chose to redesign the Wargs for The Hobbit's Middle-Earth design contest. (John Howe already painted the perfect Smaug anyway).
I prefer my Wargs hairier than the hyena-inspired creatures from the Lord of the Rings movies, and was inspired specifically by the old illustrations of Dorothy Hardy and John Bauer.
Odin and Fenrir, (1909) by Dorothy Hardy
Tyr and Fenrir, (1911) by John Bauer
The contest entry can be found here: http://www.thehobbitdesigncontest.com/entry/5773