Narrative magazine is probably the best place for modern short stories, and they have some decent poetry as well.
http://www.narrativemagazine.com/
The best short story for daydreamers imho is "The Secret Life of Walter Mitty by James Thurber.
http://www.monte.k12.co.us/delta/ola...er%20Mitty.htm
Anything by Raymond Carver is great. His most famous short story is Cathedral.
Other favorites:
The Dead by James Joyce
A Painful Case by James Joyce
Babylon Revisited by F. Scott Fitzgerald
Class by Sherman Alexie
Assimilation by Sherman Alxie
The White Heron Sarah Orne Jewett
The Daring Young Man on the Flying Trapeze by William Saroyan
The Fly by Katherine Mansfield
Gimpel the Fool, the Gentleman From Cracow, The Little Shoemakers, The Spinoza of Market Street, A Friend of Kafka...In fact, anything by Isaac Bashevis Singer
Bontsche the Silent by I.L. Peretz
The Dream of a Ridiculous Man by Fyodor Dostoevsky
Guests of the Nation by Frank O'Connor
Summer Night by Elizabeth Bowen