Galatea

This is the work I recommend most highly of all interactive fiction.

Galatea exemplifies wonderful characterization, character interaction, and open-ended (within a very small framework, granted) gameplay. The entirety of the game takes place in one room and is made up of interactions (primarly conversation) with the statue-character named Galatea. Reaching an ending is not hard, but making the choices to find every ending that one wants is a challenging endeavor.

Facade (known as a landmark in character interaction and AI) is very derivative of this system of gameplay, though it is far less interesting or involving.