This story made me prick up my ears … I agree with the idea that it is not the prototype that needs to be better, but the story … but, at the same time, we all have greater expectations of what a prototype will do. No matter whether it is a website, a computer application, a product, a book or a gadget, we all expect it to be better, cooler, faster, sleeker … and many other -er words.
It reminds me of Rodin and his sculpture, "The Thinker". To make it look "real" he made the arch of the back 20% larger than is humanly possible. By making his sculpture hyper real, he made it APPEAR true to life.
Therefore, if we want our prototypes to appear true to life … YES we need a good story (but one 20% better than the story of our real lives), but we also need to make the prototypes better as well. Because, as Guy Kawasaki points out (point 5), if you have a great idea, then five others have the same idea. But if you push to find that extra 20% in the way it has been prototyped, and then deliver it with a 20% better story than your competition, then you may just win that deal.