Okay, so I don't know if anyone will see this thread but I wanted to say that I've done A LOT of thinking on this and now have created my own app for the iPhone called Insyde Story. It's not out yet (November 30th) but I have a demo I can share.
http://www.youtube.com/user/InsydeStory
It'll also have a web component
www.insydestory.com and should allow people to create location based stories that consist of video, audio, text, soundtracks, and images.
Since you guys are the experts I'd love to get some feedback on how to make it better!