Gamasutra has a nice interview with Monkey Island creator Ron Gilbert on adventure games, games with stories in general, and why no one's making them.

I think that story in games is really way down on the list of people's priorities. It seems like most games that claim to have story really have scenarios. It's the scenario of, you know “aliens try to take over the world and you have to shoot everybody to win.” That's not a story, that's a scenario. Most games are just scenarios. They have opening cut scenes which kind of set everything up and maybe there's some kind of intermittent cut scenes that happen in the middle, but real interactive storytelling is more about the flow. It's the flow of the game around the story or the story flowing around the game. There's such a rigid structure right now in gaming, and I don't think anybody is really exploring what that can mean. It's a little bit disappointing to me.

In response to the idea that cinematics and linear storytelling was becoming obsolete in favor of games in which you can "make your own story", Gilibert had this to say:

I think, you certainly can play Grand Theft Auto and come away from it with a story. But I think most of the time people play games they come away with a really bad, boring story.

You know, a good analogy is something like watching a baseball game. There are baseball games that are just amazing stories, you know, a duel between the pitcher and the batters and the way that the game ebbs and flows and you walk away from watching that baseball game, and you're going “wow, that was a great baseball game. The story worked and it had all the drama, everything was great.” But the fact is, 92% of all baseball games are pretty boring. And I think a lot of this kind of sandbox-style gameplay like Grand Theft Auto and others... I think that's what they're like, they're like baseball games. Yes, you do come away with this incredible story occasionally, but most of the time it's just boring, and I'm more of the belief that the correct way is to really sit down and tell a story.

I could pull another dozen good quotes out of the article, but why don't you just go read it yourself.