"There are two small bays in the SM but they seem too small for parachutes, maybe flotation devices?"<br /><br />No, I think you nailed it. Those are the chute doors.<br /><br />I had a real D'oh moment. I just reread this...<br /><br />
http://www.thespacereview.com/article/682/1<br /><br />...I think I was drowsy the first time I read it because it didn't sink in. It answers all the questions.<br /><br />"...Once in orbit the Dragon’s nose flips opens and a pair of disc-shaped solar panels, nicknamed “Mickey Mouse ears”, deploy. The opened nose also reveals the docking adaptor used to mate the spacecraft with the ISS. The nose of Dragon is relatively large and can accommodate a number of different adaptors. “We’ve sized it for the really big one, which is the Common Berthing Mechanism,” Musk said, “but it can easily take smaller adaptors.”..."<br /><br />That's where I remember hearing about the mickey mouse solar panels. Not some rumor! D'oh!<br /><br />"...The crewed version of Dragon would be able to carry up to seven people; Musk did not specify how much cargo the uncrewed version of Dragon could carry. The crew/cargo compartment will be made of an advanced aluminum-lithium alloy similar to the one used on the shuttle’s external tank, but developed just in the last several years. The propulsion module, located below the crew/cargo compartment, is a donut-shaped module that contains the reaction control system, avionics, and recovery systems. The “trunk” of Dragon, an adaptor for mating the spacecraft to the top of its Falcon 9 launcher, can also be used to carry unpressurized cargo to the station..."<br /><br />Ah, so! The 'recovery systems', better known as parachutes, are located in the propulsion module. No great mystery after all. D'oh!<br /><br />The article is full of Dragon and Falcon IX goodness. So read the rest.<br /><br />