Cats Dream?

Okay, so I know that dogs can dream, because Killer barks, growls, yips, whimpers, and yelps while sleeping on a daily basis. It never dawned on me that cats can dream, but why shouldn't they? Right? Right. So, anyway, Princess is lying right next to my leg, helping to keep me warm, and she lets out quite a loud meow. She never moved and her eyes were still tightly shut. Hmmm... so cats dream too. I wonder what she's meowing at? Is she chasing hair ties? Is the dog pestering her? Is she waiting for Damien to come home? Or, is she chasing ghosts?