it's probably just me, mr. inarticulate, but if I read dialogue that doesn't use a contraction, it sounds terrible.  No matter what kind of character, it could be a posh British prime minister -- "you are" sounds horrible.  

"We are going to go out tonight" - nope, no one talks like that.  "We're gonna go out tonight."  still a horrible line of dialogue, but at least i can hear someone saying it that way.

More often than now, I read dialogue that doesn't break words down into contractions when I feel they should be.

im a big fan of "gonna" and "wanna," also.  "want to" often sounds clunky.  Those should be accepted words on final draft.

like i said, maybe it's just me.  

Some people do talk without contractions - especially non-Americans who are speaking properly.  

It's all a matter of who you are portraying.  

I use contractions when I have average people speaking to one another.  I would not use them if my character was giving a speech.  I likely would not use them if I were dealing with well-educated people in a work environment but I might use them for the same people after work hours.  It really would depend on the character.

    

I'm with Michael on this one. It's all a matter of who and what context. I do find myself using a lot of contractions nowadays, especially "wanna" and "gonna." They work quite well in natural, informal dialogue scenes.

I third what James and Michael have said.

But I can't help asking why "We're gonna go out tonight" is a horrible line of dialogue?

I tend to let the character dictate the diction.
Though most of the time, I tend to skew towards contractions.

But there's a Southern gentleman in the script I'm currently writing.
He normally doesn't use contractions... unless he gets mad.

I like using changes in speech patterns to reveal character traits.
And tinkering with contraction use is a good tool towards that end, IMO.

E.D.

I find that the majority of Americans, particularly the younger crowd always use contractions.
If I'm writing an older character or an authority figure, I never use contractions.

But whatever sounds good to the writer.

My rule about dialogue - have the inner voice in your head say the line, then write what you hear...

Most of the time, write the dialogue how it will be spoken.  Ajr makes a good point about listening to your inner voice.

Here is a page about dealing with grammar and dialect in Dialogue:

http://scripttoolbox.com/dialogue/dialogue_dialects.html

                               Chigurh
          How much?

                    Proprietor
          Sixty-nine cent.

                    Chigurh
          This. And the gas.

                    Proprietor
          Y'all getting any rain up your way?

                    Chigurh
          What way would that be?

                    Proprietor
          I seen you was from Dallas.

Chigurh tears open the bag of cashews and pours a few into his hand.

                    Chigurh
          What business is it of yours where I'm
          from, friendo?

                    Proprietor
          I didn't mean nothin by it.

                    Chigurh
          Didn't mean nothin.

                    Proprietor
          I was just passin the time.

... from (two of) the best living script-writers on the planet ...

What's that from?