Clay yourself is another website you can use for creating virtual avatars, with a twist. Using this website, you not only can create your Avatars, but you can also record a 'script' which will prompt the students to enter vowels, adjectives, nouns etc to make a funny story which they can then record and share it in a gallery.
This looks like a pretty cool app for the iPhone/iPod touch/iPad which will allow you to record student voices and the app will sync a sock puppet with the recording - you can then upload to youtube. Check it out...
The kids are really excited by the possibilities - my little girl is at OLHC kinder and came home telling me all about what they learned - check out the blog they have a solid research focus too
This looks like a great app for creating digital stories on the iPad. It allows you to draw characters or use pre-loaded ones, and then record a voiceover. Has some good reviews, too!
StoryPatch looks like a great app for the iPad for creating digital stories. The app has a library of filtered images for the students to use when creating their stories, and an option to email them once completed.
http://www.speedofcreativity.org/2011/02/10/options-for-recording-stories-on-the-ipad-story-patch-with-story-robe-sonic-pics-story-kit/ some additional information and recommendations regarding digital story-telling on the iPad