Now that ScribblePress isn't free, this is a great alternative for elementary digital storytelling. Little Story Maker lets students incorporate images from the photo roll as well as record their own audio with their stories - all for FREE.
This is a free app that is similar to iMovie. For an additional $.99, you can have full capabilities of adding photos, music, voice over, and transitions.
This app is free until April, though know that some content becomes an in-app purchase. Bookabi allows students to create their own storybooks with 2D and 3D characters. They can upload their own photos and pictures plus save and share their final projects.