'I was dreaming of you' would be more appropriate if you had just woken up. If you were telling a story, 'I was dreaming about you (last night, ect)' would fit better. They essentially mean the same thing, and either would work :) A more natural way of structuring the sentence would be 'I dreamt about you' or 'I dreamt that...'

"I was dreaming of you" is more like I am awake and thinking of you a lot "I was dreaming about you" is more like I was asleep, and had a dream about you, though it could still be used for a person who is awake and is thinking about another person a lot. So they are very similar.