I found a few apps that allow children to make up their own stories. The iPad also makes it a fun and easy way for children to start learning the art of creating stories for film and stage. These apps can also be used for descriptive conversation and answering your “wh” questions related to the story. The fact that they are free makes them especially attractive

Sock Puppets: This is a cute app and simple to use. The child selects from six character(s), eleven backgrounds and eighteen props and scenery for her story. The child records the conversations for the characters. The puppets automatically lip-synch to the child’s voice.
Ages: 4-7
Developer website: http://my.smithmicro.com
Cost: The basic app is free. Additional charges for extended recording time, more content, importing one’s own background, and to save videos to a camera.
Puppet Pals HD: The characters in this app are attractive and amusing drawings rather than puppets. There are seven fairytale and seven Wild West actors and backgrounds. One has the option of adding actors and backgrounds from one’s photos.
Ages: 4-7
Cost: The basic app is free. There are nominal charges for additional characters and backgrounds.
Super Duper StoryMaker Free: This app can be used in different ways. One choice is to tell the story already written in Tell Story. The child can read the text, describe the pictures and talk about the story. The child can change the story by adding pictures available in numerous categories or draw his own with emarkers. I like the simple, pleasing line drawings of the pictures. Text can also be changed by swiping clean the words in the book and typing in one’s own. Another option is for the child to create a story from scratch. The pictures, keyboard and markers are the same as above. When creating a story, the child can also add his own photograph.
Ages: 4-8
Developer website: www.superduperinc.com
Cost: Free. The $4.99 app allows you to save, print, or email your stories but is otherwise the same as the free app. 
Toontastic Create Cartoon: The most appealing aspect to this app is that its first screen states the terminology for story creation: Story Arc, Setup, Conflict, Challenge, Climax and Resolution. Tap on any step to read what that event entails. For instance, tap Setup and the following appears, “Introduce the characters and story setting.” If one chooses, one can remove an event such as conflict or add one. The order of the events can also be switched.
This app offers four scenes from which to select. Characters are selected and then placed on the scene. Characters can be “animated” but not really. What the app allows the child to do is move a few of the characters’ body parts and position on the setting. The animation is a replay of the movements. Conflict is represented by a choice of emoticons.
This app should allow for a lot of conversation when the child needs to talk about the conflict, challenge, climax and resolution of his story.
Ages: 7-9
Developer website: www.launchpadtoys.com
Cost: Free. Additional scenes cost $.99 each. An “all access pass” can be purchased for $9.99.