Ok, a cost should exist, I was talking physical cost, but having dwarves fatigue, thirst and hunger themselves from spellcasting seems very reasonable. It stops them being commonplace, because you only use them when you need to. Maybe the worst effects should range right up to wounds appearing, or even the dwarf aging for casting spells. I think mana is right out personally. It's a crappy way to do magic when there are so many other options, and it's only useful in pen and paper RPG games because we don't use computers to work out exactly how much magicalness you have left. Having very tough magi would be cool because it would stop them from suffering from thirst/hunger/tiredness/damage while casting.
Secondly, no spells. Hell no. You command the magi to cast, and they'll damn well cast until they're tired/thirsty/hungry/too wounded. The effect would be almost random out of anything that could happen (water magi could increase flow speed, create water, turn ice to water during cold months etc) and that's what spells would essentially be. no "do this thing" commands, just "magic please!" and hope it works for the best. Obviously the dwarves will have to be given a short list of the things that are good and bad for people, so when enemies are near they'll try to cast things that are bad for people near them, and things that are good for people near you, but it's all a bit chaotic.
Unpredictability is the base line, not something to be derived. You have to derive use from the chaos, because that makes magic fun and Funtm.