The National Gallery of Victoria has a great application on their site for digital storytelling. Granted, it applies for creating a story from Old Japan, but none the less this is one of the better digital storytelling sites around.
As w/ most sites like this a user gets to choose a background, character, props, actions, etc and then develop a story to their liking. As I only developed 1 scene I'm not sure if the finished product lets you get an embed code to put on a site but I'm sure it generates a URL in the very least.
I'd like to thank the great blog by the Book Chook for alerting me to this wonderful site.
Give Create Your Story a try by clicking here!!!