Sorry, but the recent thread used a term that just makes me boil over.  
It is, in my view, the quest for "interactive fiction" that has held 
back gaming now for decades.

The reason for this is simple.  Interaction is an anathema to excellent 
storytelling.  A storyteller, at least per the Poetics, is concerned 
above all things, with timing.  The tempo of a story is everything.  The 
manner and velocity with which the characters are introduced and 
developed is essential to obtaining the necessary suspension of 
disbelief -- the tempo of building conflicts ultimately yielding a 
climax or climaxes drives the reader to continue, and the effectiveness 
of the denoument to finish, explain and justify the story are all 
measured along a timescale -- and the tempo between these elements is 
essential.

It is the nature of a simulation, or interactive game, to permit the 
user control over his environment.  Should he enjoy prowling around an 
arena for hours, so be it.  If he wants to wander aimlessly through a 
jungle or search the interstices of irrelevant subject matter to the 
game -- again, so be it.  The more detail, the more interesting the 
scenario -- but the far less effective the story.  As an extreme 
example, while a simulation can sustain dead ends to make a game work, 
no story can survive that.  On the other hand, if you have no dead ends 
at all, players feel a grave loss of challenge.  (Enter the love-hate 
relationship between gamers, game designers and their game "cheats," 
walkthoughs and "cheat books.")

This inherent conflict, the war between storytelling and interaction is, 
to me, the locus where all games (including my own efforts in this 
regard) have failed.  Of course, some merging of interaction and 
storytelling is possible without one destroying the other, but the more 
of one formulation is added, the more the other suffers.  The trick, of 
course, is to recognize that interactive fiction is an oxymoron.  To 
design the game well, first realistically design it as either a 
simulation-with-a-bit-o-story, or a story-with-a-bit-o-simulation.  Then 
use smoke-and-mirrors, plain old theatre tricks plus new tech tricks, to 
make the game SEEM more storytelling, or more interactive, than it 
really is.

Sorry, but this is one of my soft spots.