I put this on the Middle Earth wargames FB page but thought this might stimulate some discussion here. I am sure Hobgoblin may have some thoughts (and probably tell me the stupidity of my ways!).
"These are my thoughts on wolves, wargs and werewolves. Tolkien didn’t write his books with wargamers or role-players in mind and as such was quite happy to be vague on many topics.
With respect to wolves, werewolves and wargs there is no real certainty and things are made worse by the unusual wolves that attacked the Fellowship in Hollin.
Wolves
Tolkien will use the term wolf for werewolves, wargs and also normal wolves. The white wolves that invaded the Eriador and attacked the Shire during the Fell Winter are probably natural wolves.
Werewolves and Wargs
While he does refer to both as wolves, I don’t believe they are the same. Wargs are not specifically mentioned in the Silmarillion although there is mention of wolves working with orcs and I suspect these would be what were later termed wargs (I believe this was a name given to them by the ancestors of the Rohirrim). Some feel that wargs are the same as werewolves but I would contest that the First Age werewolves seem to be very large and very powerful (wolves inhabited by evil spirits, possibly lesser Umaiar) and only slain by mighty warriors or special hounds. Wargs are slain by mere men and many are killed by Legolas, a rustic Sylvan/Sindar elf, not a mighty Noldor from when elves were in their prime. Therefore they must be different creatures.
Wargs, I feel, cannot be massive. The Battles for the Fords of Isen, perhaps, give us the best description of the tactical use of wargs and wolf riders. They are not used as a shock force in these battles (this was the role of massed Uruks and axemen). They seem to have been used as scouts, a rapidly mobile force that could isolate and cut off enemy forces and were employed particularly against picketed horses. The note regarding wolf riders is as follows:
“They were very swift and skilled in avoiding ordered men in close array, being used mostly to destroy isolated groups or to hunt down fugitives; but at need they would pass with reckless ferocity through any gaps in companies of horsemen, slashing at the bellies of the horses.”
If wargs were massive they would be great as a battering ram against some puny men in a shield wall but are just not employed this way. As already mentioned by Ant Lane, if they are slashing at the bellies of horses, they must be shorter than horses. They might still be relatively strong and bulky as they have to carry orcs swiftly.
The Wolves of Hollin
These pose some problems for a number of reasons and I think people erroneously believe that these were typical of all wargs.
They certainly have the appearance of wargs as Aragorn identifies them as such. Gandalf, of course, has had previous encounters with wargs but does seem somewhat surprised or worried by the fact that the dead wolves have disappeared the morning after the attack. I think this indicates that these were not typical wargs.
Gandalf does use the term gaurhoth, meaning werewolf, during the fight.
“Naur an edraith amen! Naur dan I ngaurhoth!”
Does it mean these are werewolves? I don’t think so. Werewolves didn’t vanish on death in the Silmarillion and these must have appeared much the usual size for wargs (for the reason above). I think this is merely an incantation remembered from the First Age.
So, for gamers, I think we can have wolves, wargs, some sort of strange spirit wolf/warg and, if gaming in the First Age, werewolves.
Wolves are normal sized wolves. Wargs are larger, possibly stocky but not overly tall and more intelligent. Werewolves are large (most) to massive (Carcharoth). The wolves of Hollin are warg sized, probably mortal (they died) but were under some sort of necromancy.
The great thing with Tolkien is that you all may disagree but your arguments will all lack definitive proof (as do mine) and I am free to imagine wolves and wargs as I wish (as you can in your own way). Just remember, however, that I am right and you are wrong".

I am quite happy to have my Reaper warg and Fenrisian wolves as werewolves.
The Red Box wolves will be wargs.
The Thunderbolt Mountain wolf will join some RAFM wolves (I am yet to order these) as mounts for the Oathmark wolf riders.
I have just had it pointed out that it would have been cheaper just to buy some Asgard wolf riders, but there you go.
I don't know what I will use the Oathmark wolves for. Wolf statues maybe? I really don't need more werewolves (six are more than enough).
As for my normal wolves, they will be............ wolves.