Yes, it's Smowg
 

JRRT always pronounced it that way, according to - erm - a member of his original Hobbit audience.

Shouldn't it be that way? Sauron is sour-on, after all.

Well 'Sauron' is from Elvish and 'Smaug' is from Dalish, which is to say, Old Norse, but the Old Norse 'au' is indeed pronounced 'ow.'

The English always anglicised foreign names. Giovanni Gaboto became John Cabot. So I don't see why local dialects from English speaking countries around the world can't pronounce Tolkien names according to their own dialect. ;)

Also, at least as far as my reading goes, in the Appendix concerned Tolkien suggests that the pronunciation advice in the Elvish section also pertains to names in other languages, unless otherwise noted. Even for names in translation it seems, as some of the Old English details are 'otherwise' noted.

Smaug is seemingly a translation for Trâgu, if posthumously published texts are to be accepted here anyway.

The only instance I'm currently aware of [although it's not like I've been looking] that doesn't work is Gandalf, as it's not Gandalv which it would be if we went back to the Elvish section. Although it works for Smaug in any case.

I always pronounced it Sour-on and most often wrote too, until a friend of mine corrected me. :D