Why is my dog so dog-agressive and people shy?

The dog aggression and people shyness are two manifestations of the same issue. The dog aggression sounds like it is fear based as would the humn shyness is. He needs more socialization in a safe environment. Try taking him to obedience cles at your local shelter or training center (stay away from petsmart, etc because their trainers are good for puppy groups but many of them don' thave experience training aggressive dogs). He needs to learn to feel safe around other dogs and people and the only way to do that is through positive exposure.