Storytelling can be done in many ways, I don't doubt that. But the reason that SOTC and Ico were so good to me, is that they don't need to have a good story to be good games. To say they had a good story, I just can't agree with that point, especially when they have an obviously shallow story in the game in the first place.
Fair enough. I think this may be an issue regarding what we think of as "story" - I remember the old school debates about whether The Lady or the Tiger? (http://www.eastoftheweb.com/short-stories/UBooks/LadyTige.shtml
) really qualifies as a story, since what you the reader decide explicitly defines a lot about the characters. By your definition these characters would fairly lack development, but I don't think that means it doesn't qualify as a story.
SOTC is different insofar as the characters are defined even more by what you project onto them - the protagonist, the horse, these are largely blank canvases about whom we know very little except that we are on this journey with them, only to later discover that perhaps the journey doesn't go where we want. That in and of itself is a powerful story because we invest these blank canvases with meaning.
I totally see your point that the lack of character development by the creators makes that game a weaker "story" in the sense you are discussing "story". I just think the definition you are talking about is too narrow, but I do see your point.
Incidentally, while we're talking about abstract stuff like this, did everybody see that Ebert admitted he might be wrong about games?http://blogs.suntimes.com/ebert/2010/07/okay_kids_play_on_my_lawn.html