So your question is how to tell a story without loosing interest?
It is true that a lot of today's games are very thin on plot, especially those that are what you would consider episodic, and then there are games where the plot is so contrived, the player skims over the info, saying to themselves, "I'll figure it out when I play it again". Sad thing is that many think of that as replay value.
I believe one answer is the story itself. If the plot is something the player can identify with you will find it much easier to keep his, or her interest. Take the standard rpg for example, generally the protagonist is some teenage boy, who starts out as powerless, and must fight against some evil antagonist who is much older, more experienced, and wishes to force their will upon you.
Right off the bat you can see what audience this would appeal to. You see, every game has to have a niche target. Knowing what that is is a great place to start.
Of course looking at most Japanese styled rpg's one would think the average player was 16, carried around a big sword, had yellow or blue hair, and had a pension for cross dressing.
Going on with the story itself, there are many things that are timeless, mythological, stories that can be retold time, and time again. Stories that everyone knows, and that everyone can relate to, even if you completely butcher its original meaning. Things like saving the princess, or zombies taking over the world, these stories tell themselves, and the way people relate to them is almost genetically programed.
One final thing to think about, curiosity.
While interactivity is great and all, no one wants to talk to the same npc a thousand times. You must keep the story going, and to do this you must reward curiosity, if you plan on telling a story.
Even if the user faces great danger, or mindless dungeon crawling, they will do these things just to see what the heck your talking about. Mind you the reward must be worth the price or time involved.