Here is a simple decompressor in C. I'd very much appreciate any advice or comments about the structure/logic of the program, style of the code, or reusability of the features. I'm a real novice and really eager to learn from people here, so fire away!

lzw.h:

/**
 *  lzw.h
 *  Function declarations for lzw decompression algorithm.
 */

#ifndef LZW_H
#define LZW_H

#include <stdio.h>
#include <stdlib.h>

/**
 *  Frees all blocks between 'from' and 'to' (inclusive) in the dict.
 */
void free_dict (unsigned char* dict[], int from, int to);

/**
 *  Enters the first 256 ASCII values into dict.
 */
void load_dict_defaults (unsigned char* dict[]);

/**
 *  Reads 12 bits from source and returns them as an int.
 */
int fread_twelve(FILE* source);

/**
 *  LZW decompression of source to dest.
 *  Returns 0 if successful, a positive integer otherwise.
 */
int decompress (FILE* source, FILE* dest);

#endif // LZW_H

decompress.c:

/**
 *  decompress.c
 *  Implementation of LZW decompression algorithm using 12-bit fixed-width compression format.
 *
 *  Usage: decompress
 */

#include "lzw.h"
#include <stdio.h>
#include <stdlib.h>

int main (int argc, char* argv[])
{   
    // check for correct number of args
    if (argc != 3)
    {
        printf("Usage: decompress source destination\n");
        return 1;
    }
    
    // open compressed file
    FILE* source = fopen(argv[1], "r");
    if (source == NULL)
    {
        printf("Error: cannot open %s\n", argv[1]);
        return 1;
    }
    
    // open destination file
    FILE* dest = fopen(argv[2], "w");
    if (dest == NULL)
    {
        printf("Error: cannot open %s\n", argv[2]);
        return 1;
    }
    
    // decompress
    if (decompress(source, dest) == 1)
    {
        printf("Decompression failed\n");
        fclose(source);
        fclose(dest);
        return 1;
    }
    else
    {
        fclose(source);
        fclose(dest);
        return 0;
    }
}

lzw.c:

/**
 *  lzw.c
 *  Implementation of LZW decompression algorithm using 12-bit fixed-width compression format.
 *
 */

#include "lzw.h"
#include <stdio.h>
#include <stdlib.h>
#include <string.h>
#include <stdbool.h>

unsigned char* dictionary[4096];

/**
 *  Enters the first 256 ASCII values into dict.
 */
void load_dict_defaults (unsigned char* dict[])
{
    unsigned char* temp;
    unsigned char c = 0;
    for (int i = 0; i < 256; i++)
    {
        temp = calloc(2, sizeof(unsigned char));
        temp[0] = c++;
        dict[i] = temp;
    }
}

/**
 *  Frees all blocks between 'from' and 'to' (inclusive) in the dict.
 */
void free_dict (unsigned char* dict[], int from, int to)
{
    for (int i = from; i <= to; i++)
    {
        free(dict[i]);
    }
}

/**
 *  Reads 12 bits from source and returns them as an int.
 *  Returns 0 on an error or EOF.
 */
int fread_twelve(FILE* source)
{
    int value;
    static bool left = true;
    
    unsigned char buf[2];
    
    if (left)
    {
        // if left, read two bytes and calculate int
        if (fread(buf, 1, 2, source) != 2) {return 0;}

        if (feof(source))    // we're at a 16-bit end!  
        {
            value = (buf[0] << 8) | buf[1];
        }
        else
        {
            value = (buf[0] << 4) | (buf[1] >> 4);
        }
        left = false;
    }
    else
    {
        // if right, rewind source by one byte, read two bytes and calculate int
        fseek(source, -1, SEEK_CUR);
        if (fread(buf, 1, 2, source) != 2) {return 0;}
        value = ((buf[0] & 0x0F) << 8) | buf[1];
        left = true;
    }
    return value;
}

/**
 *  LZW decompression of source to dest.
 *  Returns 0 if successful, a positive integer otherwise.
 */
int decompress (FILE* source, FILE* dest)
{
    load_dict_defaults(dictionary);
    
    int dictPos = 256;
        
    int prevCode, currCode;
    unsigned char* prevString, *currString;
    
    // read in the first character
    currCode = fread_twelve(source);
    if (dictionary[currCode] == NULL)
    {
        return 1;
    }
    size_t size;
    size = strlen((char*)dictionary[currCode]);
    currString = calloc(size + 2, sizeof(char)); //+2 for upcoming char and null
    if (currString == NULL)
    {
        return 1;
    }
    memcpy(currString, dictionary[currCode], size+1);
    fprintf(dest, "%s", currString);
    prevCode = currCode;
    prevString = currString;
    
    // read in the rest of the characters
    while ( (currCode = fread_twelve(source)) && currCode )
    {       
        if (dictionary[currCode] == NULL)
        {
            return 1;
        }
        size = strlen((char*)dictionary[currCode]);
        currString = calloc(size + 2, sizeof(char)); //+2 for upcoming char and null
        if (currString == NULL)
        {
            return 1;
        }
        memcpy(currString, dictionary[currCode], size+1);
        fprintf(dest, "%s", currString);
        
        if (currCode > dictPos)
        {
            dictionary[dictPos++] = (unsigned char*) strncat((char*)prevString, (char*)prevString, 1);
        }
        else
        {
            dictionary[dictPos++] = (unsigned char*) strncat((char*)prevString, (char*)currString, 1);
        }
                    
        // restart dict if full.
        if (dictPos >= 4096)
        {
            free_dict(dictionary, 256, 4096);
            dictPos = 256;
        }
        
        prevCode = currCode;
        prevString = currString;
    }
    
    free_dict(dictionary, 0, dictPos-1);
    
    return 0;
}

Link to the followup question: LZW decompressor in C (II)