The first edition of Collaborative Storytelling is available. With this webapp, you can create stories one sentence at a time, hopefully in cooperation with one or more other storytellers.
Currently, there are no explicit linebreaks, so I recommend keeping your
stories short, or dealing with the chaos of single-paragraph stories.
Also, no, I cannot tell you who screwed up your story. This is by
design. The Internet is all about chaos and anonymity. Why then do I
require registration? Because an sql-injection scanner, for example,
might dump huge amounts of garbage into a story, and I'd like to keep
the garbage to people actually interested 
Collaborative Storytelling was developed in python using the Django web framework. This made it dizzyingly easy to develop the app---less than three days of off-and-on work. While this doesn't include beautification, I'm not an artist, so...
I hope you have as much fun using it as I had writing it! Go forth and create!