Kerpoof http://www.kerpoof.com
An amazing site for expressing creativity. You can create a free Teacher Account, which provides some nice features for using this with students. There are numerous activities here, but the most impressive are Make a Story and Make a Movie. These allow students to use existing backgrounds, characters, and props. The Make a Story activity allows students to create JPEG images of each page of their story, so that you can post them on your web site. The Make a Movie activity actually allows students to create an animated movie of their story, which you can link to on your web site.

PhotoPeach http://photopeach.com/
Combine images, music, and text to help students learn about presentation, expression, writing, communication skills, art appreciation, and media literacy. The quality of the finished work is great and students will remember it forever.

Little Bird Tales https://littlebirdtales.com/
A fun,unique way to create,record and share stories online. Kids can make drawings,upload photos add text and more!

MixBook http://www.mixbook.com/
A very powerful site for creating story books. This one focuses mainly on creating photo books using your own photos, but it is wonderful for writing stories. Similar to Story Jumper, it is based on a model of offering everything for free, but charging only if you want to order a softback or hardback copy of your book.

My Storymaker http://www.carnegielibrary.org/kids/storymaker
Very simple to use, and students do not need an account to create stories here. Students choose their main character from a list of possible characters, then they choose the character's goal and a secondary character.Stories can be printed or saved as PDF files.

StoryBird http://storybird.com
This site allows you to use collections of existing artwork from various artists as inspiration. Or you can choose a theme. This site also allows collaborative story writing (although it is not necessary). You need to set up an account. Students can sign up (or you can sign them up) on a special kids sign-up page in which they can enter your teacher email address (instead of parent address). Finished stories can be published to the web, and teachers can link to these on their web sites.

StoryJumper http://www.storyjumper.com/
StoryJumper is an easy-to-use site for creating storybooks. Many props, characters, and scenes are available to use in the stories. One of the best features of this site is that they have a Classroom Edition, in which you can set up a virtual StoryJumper classroom, where you can have your students sign in to a safe environment, with a number of teacher-friendly features.

ZooBurst http://www.zooburst.com
ZooBurst is a digital storytelling tool that lets anyone easily create his or her own 3D pop-up books.