"Facade" -- An Electronic Narrative

Facade is an interactive story-turned-videogame. The story goes that you have been invited to the flat of two married friends under false pretenses. As soon as you are in the door you realize that they are having marital issues, and that they wish you to help them sort these issues out.
The game is played from a first person perspective. You can both interact with your environment by way of the mouse cursor, walk around the flat, and, most importantly, talk to the characters -- type in whatever you like, and the characters respond with pre-recorded lines of dialogue.
But what makes this title significant is that the couple, Grace and Trip, are represented as real, breathing, interactive characters. You can change their emotional state with your actions and words. You can solve their "couple problems", or make things much worse (just tell Grace you love her!).
I'd played this game before it was mentioned last week. The game is still significant, though -- nothing new or significant in this vein has yet emerged. The developers of Facade are still working on getting funding for a sequel title, one that is going to be just as revolutionary if they are to be believed.