Here is a link to something that I wrote for a ten-page story assignment for my fiction writing class. Just keep in mind that it is a blog, and so it is in reverse-chronological order... so whatever that means to you... read accordingly.
I really like the idea of fiction blogging. I guess it's kind of like writing in a journal format, but there is something magical about the meta-physicality of the internet that appeals to me, and the format is far more flexible. I think there is a certain barrier that a reader has to overcome, however small, when they are holding a stack of papers, or a book, that is, a conflict between the reality that a story is trying to create, and the actual tangible reality of holding something in your hands that you printed or bought. For example, when you read Anne Frank's diary, it's not really Anne Frank's diary at all, but rather a copy, or re-publishing. When you read a blog, you are sucked into a world that is also a real part of the real world, and though what you are reading may or may not be fictional, there is so much less in the way of amalgamating those two realities.
This would perhaps be illustrated better by a blog that is fictional in a more subtle fashion, like this one: http://www.myregisblog.com/ . This is perhaps more non-fiction satire than fiction, but the idea is still the same. The writer is creating a character and a setting, with the purpose of convincing the reader of the reality of a certain world. At least, I hope it's satire. That's the beauty of the format. When you read a blog, you are stepping into someones life, and are left to make your own assumptions about their character (assuming that you don't know them in real life), which as a fiction writer, is a great start at engaging the reader.
Anyways, that's my shpeel. Admittedly, I am not an avid blog reader. I am just interested in the concept of the medium.