Inkle Writer is a neat tool for writing interactive stories that I learned about from Larry Ferlazzo. Inkle Writer provides a platform on which you can write "choose your own adventure" style stories. On Inkle Writer you write each paragraph (or less) as an independent piece that you can connect to other pieces of your story. You can take the story into many directions then piece them together from your menu of paragraphs.
While trying Inkle Writer it struck me as being a bit like Playfic. The difference between the two is that Inkle Writer has a much more visual interface for constructing stories.
Applications for Education
Inkle Writer could be a good platform for students to use to construct narrative stories that contain many characters and plot lines.